The Death Watch Continues

GM's Cars of TomorrowTo nobody’s surprise, bondholders said no to GM’s magnanimous final offer of a 10-percent share in the reorganized company. It’s now virtually certain that the courts will take over in the next few days. Said Bloomberg,

The exchange offer was opposed by both institutional and individual investors, who said they’ve been treated worse than a union retiree-medical fund.

My God, worse than a retiree-medical fund run by a union? What could be more demeaning than that? Still, the outcome of the swap offer last night clearly demonstrated that investors felt they were being, shall we say, shortchanged. They were in no position to buck the government—already lending GM $19.4 billion and promising at least $30 billion more. Canada is also in for $9 billion.

As we reported earlier, GM’s bankruptcy route will likely be similar to Chrysler’s, though the issues are a good deal more complex. In Germany, Opel and Vauxhall assets are being pooled and segregated from the parent company to prepare for sale to Fiat or Magna, along with some government loan guarantees.

What the implications are, long- and short-term, of two-government ownership is hard to say. We can say it will be a rocky ride.

With the U.S. government owning about 70 percent of GM, you know who will be calling the shots, though they claim a hands-off approach. Can they call the right ones? Tell us what you think.

—jgoods

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