Tuesday, April 14, 2009

U.S. may swap GM debt for equity

Possible move would improve automaker's shaky balance sheet

Article From
David Shepardson and Robert Snell / The Detroit News

The federal government may agree to swap some of its $13.4 billion in General Motors Corp. debt for new equity in the company in a move to help boost GM's balance sheet, a person familiar with the matter said Monday.

The government is in discussions with GM as the automaker tries to accelerate its restructuring ahead of a June 1 deadline to wrest concessions from bondholders and the United Auto Workers or face bankruptcy.

In January, GM granted the Treasury Department warrants for 122 million shares, 19.99 percent of the automaker's outstanding common stock, with an exercise price of $3.57. It's not clear how the warrants would be affected in bankruptcy court.

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