GM Said to Be Warned Government Won't Provide Aid for June 1 Debt Payment

GM Said to Be Warned Government Won't Provide Aid for June 1 Debt Payment
April 1 (Bloomberg) -- General Motors Corp.ís 60-day deadline to
restructure is unlikely to be extended because the U.S. wonít repay $1 billion in convertible notes maturing June 1, according to a person with knowledge of the discussions.
President Barack Obamaís auto task force told the biggest U.S. automaker it doesnít want taxpayer funds used to repay debt maturities, said the person, who declined to be identified because the talks are private. Detroit-based GM has $1 billion of 1.5 percent convertible securities coming due June 1. The debentures, issued in increments of $25, fell $2.89 to $6.36 as of 3:26 p.m. in New York, which would be the lowest closing price since December, according to data compiled by Bloomberg.
GM Chief Executive Officer Fritz Henderson yesterday said that June 1 was the final deadline for completing the debt restructuring and that the automaker may enter bankruptcy sooner if itís clear an agreement out of court isnít possible.
ďThe government has been very specific in providing a deadline by which we have to complete this process and we plan to aggressively pursue them in the next 60 days,Ē GM spokeswoman Renee Rashid-Merem said, declining additional comment.
Obama gave GM 60 days to come up with deeper cost and debt reductions than the carmaker proposed in its plan submitted in February. GM is trying to prove itís viable, a U.S. requirement to keep $13.4 billion in federal loans. The president believes a quick, negotiated bankruptcy is the most likely way for GM to restructure and become a competitive automaker, according to people familiar with the matter.
Health-Care Fund
As part of its restructuring, GM must shrink $27.5 billion in debt by getting bondholders to swap their claims for equity. The carmaker must also reduce $20.4 billion in obligations to a union-run health-are fund.
Bondholders doubt a debt exchange will succeed outside of bankruptcy because there isnít enough time under the administrationís deadline, according to a person familiar with the thinking of the committee representing creditors who declined to be named because the discussions are private. A prepackaged bankruptcy is more likely to work, the person said.
Treasury spokesman Isaac Baker didnít immediately respond to an e-mail seeking comment.
Civis Romanus Sum

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