GM Bondholders Accept Sweetened Deal

It looks like we are going to see a Good-GM vs. Bad-GM breakup according to this. Also the bondholders get a pretty okay deal for the most part:

In addition to the 10 percent of the stock in a newly formed GM that was originally rejected by bondholders, the new offer would give them warrants to acquire an additional 15 percent stake at a deep discount. That would come only if they agree to support selling the company's assets to a new company under bankruptcy court protection.

So that could potentially give them a 25% stake in the company and more of a chance of recovering their investment if the new company becomes profitable again. I think someone finally told Obama that these guys aren't all "greedy speculators." He finally realized that they were mostly pension funds and hedge funds that have a fiduciary responsibility to lose as little money as possible. Ripping these guys off actually hurts retired teachers and policemen who have GM bonds in their pension funds.

The final plan also seems somewhat fairer then that rip-off Chrysler deal. The US Government gets 72.5%, the UAW gets 17.5%, the unsecured bondholders get 10%, with an option to get another 15% probably out of the governments share. What would be left of GM sounds like a decent enough company as well

The plan envisions the slimmed-down new GM, shorn of more plants and brands, would have $17 billion in long-term debt and $9 billion in debt-like preferred shares. That would represent a 61 percent decline from its existing debt load of about $67 billion.

They might even move into 3rd place in the US behind Toyota and Ford if it keeps its profitable brands and jettisons the rest. That depends on how much market share will be lost during the restructuring. They are still fairly profitable in China and other foreign countries so they might be a decent enough company coming out of the bankruptcy.

They should also think about building Buick plants in China where that brand is actually quite popular IIRC. Actually it would make sense to have Buick as a China-only brand and concentrate on Chevy, GMC and Cadillac in the US market. I have a feeling that the government might nix any China deals in the interests of "keeping jobs in the US" even though it will hurt their investment in the long run.