Major GM bondholders agree to a new sweetened deal, creditors may get 25% of new GM

In its original offer to bondholders, GM was offering creditors a 10 percent stake in a new GM in exchange to reduce its $27 billion debt. That didn’t work out to well since GM failed to get the near 90 percent support of bondholders it needed to fight off bankruptcy.

Nonetheless, today a committee of major bondholders at GM and the U.S. Treasury Department have reached an agreement that would give creditors a larger stake in GM.

Revealed in a Securities and Exchange Commission filing by GM, the agreement says that bondholders would get 10 percent of the new company that comes out of bankruptcy but would also give creditors the rights to buy an additional 15 percent of the company’s stock at a low price.

While this is good news for GM, it will not help the struggling Detroit automaker avoid a Chapter 11 filing. The move, however, will clear potential obstacles for GM during its stay in court.

- By: Omar Rana

Source: CNNMoney