by Calculated Risk on 4/27/2009 06:20:00 PM

This morning GM offered to exchange equity in the restructured company for the outstanding $27 billion in debt. The bondholders responded negatively ...

Statement from ad hoc committee of GM bondholders via WSJ:

... The current offer is neither reasonable nor adequate. Both the union and the bondholders hold unsecured claims against GM. However, the union's VEBA would receive a 50 percent recovery in cash and a 39 percent stake in a new GM for its $20 billion in obligations; while bondholders, who own more than $27 billion in GM bonds and have the same legal rights as the unions, would only receive a mere 10 percent of the restructured company and essentially no cash.

The offer was made unilaterally, without any prior discussion or negotiation with bondholders and in spite of repeated calls for dialogue.
...
This offer demonstrates that the company and the auto task force, unfortunately, are pinning their hopes on an extremely risky and legally questionable turnaround in bankruptcy court, instead of engaging its lenders and workers in the very type of negotiations that could avoid such a fate.

Apparently the bondholders are preparing a counteroffer.