Bondholders Give The Finger To GM
And who can blame them? After offering only a minority stake in the company for financing the operation for years, there should certainly be some disgruntled bondholders. But let’s settle some math…
I want you to take a look at these statistics and tell me that these numbers are fair:
UAW gets $6.5 Billion in preferred shares that yield 9% per year or $585 million per annum.
The US government gets a 50% stake in exchange for forgiving $20 Billion in debt
Bondholders holding more than $27 billion of debt get 10% of the company
Current shareholders get 1%
Bondholders, which put their private wealth on the line for the company get one-fifth as much as the US government, despite funding the company with 35% more equity than the Feds.
Shareholders, which own 100% of the company as it stands, get 1% of the new company.
Union workers, which presently own ZERO of the current company, and are owed billions in future pension payments because GM fraudulently allocated its retirement plan money elsewhere, get a $585 million per year handout.
The US Government, which gave the company a little over 40% of its current loaned total gets a 50% stake.
Who’s getting the shaft? Everyone… except the union.
They were sure to make it clear they did not want stock. They didn’t want to hold parts of the company because they didn’t think they’d be able to sell it fast enough. They want a job working for the company, but they don’t want a vested interest in its financial future? HA!
I feel for the bondholders, I truly do. At this point the company needs to be liquidated, its assets sold, and the proceeds given to who should first receive any payments, THE BONDHOLDERS.
If I were a bondholder in GM I’d vote NO too. Why should I, who took risk to fund a terrible company, be ripped off by the very people who’s wages and benefits drove it into the ground?
