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GM says bondholders support sweetened offer

DETROIT (AP) ó General Motors Corp. said Thursday a committee of bondholders has agreed to a sweetened deal to erase of the automaker’s unsecured debt in exchange for company stock.
A person familiar with the deal said that it is probable GM will file for bankruptcy protection. The person asked not to be identified by name because discussions are still under way with the U.S. and Canadian governments and there is a small chance that the company could avoid a Chapter 11 filing.
The company said in a statement that it offered bondholders 10 percent of the stock in a newly formed GM, with warrants to buy up to 15 percent if the bondholders agree to support selling the company’s assets to a new company under bankruptcy court protection.
The company made the disclosure in a filing with the U.S. Securities and Exchange Commission.
The filing says if the bondholders don’t agree to support the sale, then the amount of stock and warrants they get would be substantially reduced or eliminated.
Under the proposal, which has a deadline of 5 p.m. Saturday, GM would at some point enter bankruptcy protection and its good assets would be separated from bad ones.
The U.S. Treasury would get 72.5 percent of the new company’s shares, while a United Auto Workers’ retiree health care trust fund will get 17.5 percent and the old GM would get 10 percent.
The bondholders’ stake would presumably be additional shares that would dilute the first batch issued by the new company. The UAW trust and others would get warrants for additional shares that would further dilute the stock.
Trading of GM shares was halted for a short time Thursday morning, but resumed to rise 18 cents, or 15.7 percent, to $1.33.

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