A previous plan had GM's bondholders taking just 10% of the restructured company, a figure that was just too low for them to accept given their investment level. So the U.S. Treasury and a committee of bondholders reworked the proposal into something both sides could live with.
"This agreement represents another important step in GM's restructuring process," the administration said in a statement. "The task force will continue its efforts to help ensure that GM emerges from this restructuring process as a strong, viable company that can operate independent of government support."
For its part, the company seemed pleased with the deal in a statement released today, saying, "GM appreciates the unwavering support of the U.S. Treasury and the President's Task Force on Autos and thanks the unofficial committee of bondholders for their support of the proposal."
The U.S. doesn't want to take active control of GM despite its huge ownership stake, however. According to a source speaking with Automotive News, the government is "not going to put U.S. government people, employees on the board," and that it "want[s] to be shareholders for as short a period of time and almost in as inactive a way as [it] can responsibly be."
The Treasury's stake comes in exchange for another $30.1 billion in debtor-in-possession financing and exit financing, reports the Detroit News, while the bondholders are trading their $27.2 billion in debt holdings for 10% in common stock and another 15% in warrants, to aid the transition from the UAW's temporary holding of 17.5% of GM's common stock, which will later be reduced to 2.5%.
Looking forward to Monday, expect an announcement of GM's Chapter 11 bankruptcy filing along with the possible announcement of closures - possibly temporary - of up to 14 plants, as suggested by an AP wire report today.