US toughens terms for GM, Chrysler

April 11, 2009|Associated Press

NEW YORK - The federal government is pushing for tougher concessions from the creditors of General Motors Corp. and Chrysler LLC, according to a published report, as the troubled automakers face looming deadlines to restructure or seek bankruptcy protection.

The Treasury Department wants GM to offer its bondholders a small amount of its stock in exchange for their $29 billion of GM debt, The Wall Street Journal reported yesterday, citing unnamed people familiar with the matter.

The new offer is much less generous than a similar offer GM made two weeks ago, which would have included cash, new debt, and a much larger portion of the company's stock, according to the report.

Representatives from GM and the government's auto task force declined to comment. Messages were left seeking comment from Chrysler.

Advisers to the GM bondholder committee said yesterday they had not had any contact with GM or the auto task force since late March.

The debt held by GM's bondholders has emerged as a major sticking point in the Detroit automaker's efforts to restructure. GM has been surviving on $13.5 billion in loans from the Treasury Department since the beginning of the year and last month requested up to $16.6 billion more.

Chrysler, meanwhile, has been kept afloat by $4 billion in government loans. The auto task force believes the Auburn Hills, Mich., automaker cannot survive as a stand-alone company.