GM creditors 'back bankruptcy deal'

US car giant's creditors set to own part of restructured GM in new deal.

    General Motors has been hit hard by
    a slump in car sales [EPA]

    The Canadian government and the United Auto Workers union are also set to own smaller shares in the firm, reports say.

    Restructure

    In depth


     Glory days over for US car industry

     Video: Race to secure GM Europe's 50,000 workforce
     Video: GM slips towards oblivion

    An Obama administration official said on Thursday that the government expected GM to be in bankruptcy proceedings for between 60 and 90 days before it re-emerged as a new company.

    Creditors who are owed about $27bn in debt rejected a deal on Wednesday that would have given them 10 per cent of a restructured GM.

    But they appeared to accept a new offer on Thursday that would see them also receive warrants to acquire another 15 per cent of the equity in the new company.

    The offer would be made provided the creditors support a quick sale process similar to one now being used for Chrysler, another of the so-called big three Detroit-based vehicle manufacturers, which has already entered bankruptcy proceedings.

    The US automobile industry has been hit hard by a slump in sales amid a US recession and a global financial crisis.

    Germany talks break down

    GM's debt


    GM's total liabilities of $185bn break down into:

    $27bn in unsecured debt
    $25.5bn in government and bank loans
    $20bn owed on healthcare and pensions
    $112.5bn in other debt

    Talks between Germany and the United States aimed at saving GM's Opel unit broke down on Thursday, raising fears over tens of thousands of jobs in Europe.

    All-night discussions in Berlin, the German capital, ended when GM and the US government said they needed an extra $416m in temporary loans from Germany to keep Opel afloat.

    Peer Steinbrueck, Germany's finance minister, described the last minute tactic as "scandalous".

    The negotiations were aimed at finding a suitable buyer for the US carmaker's ailing European operations, including Opel and Britain's Vauxhall Motors, in an attempt to shield them from GM's looming bankruptcy in the US.

    SOURCE: Agencies


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