Big Three, Debt-for-equity | featured news

A majority of bondholders agree to swap their debt for a stake in a reorganized GM, which is expected to file for Chapter 11 on Monday.

G.M. said a key group of bondholders agreed not to oppose the reorganization plan in exchange for a stake of 10% in the new G.M., with warrants to buy an additional 15%.

G.M. prepared for a bankruptcy filing, as bondholders rejected an offer to exchange $27 billion in debt for stock.

General Motors Corp. said it will cut 21,000 U.S. factory jobs by next year, phase out its storied Pontiac brand and ask the government to take more than half its stock in exchange for half of GM's government debt as part of a major restructuring that would leave current shareholders holding just 1 percent of the company.

Under the terms of the new plan, Chrysler’s lenders would receive about 22 cents on the dollar, plus a 5 percent equity stake in the reorganized company, a person with knowledge of the matter said.

General Motors Corp. will not make a $1 billion debt payment due June 1, its CFO, Ray Young, told reporters on Wednesday. Instead, it is hoping to complete a debt-for-equity exchange or be forced to resort to bankruptcy.

GM's stock plummeted on the news.