Posted by
Tom L. on Monday, May 04, 2009 6:00:00 AM
According to Bloomberg:
General Motors Corp. may be more likely to end up in bankruptcy based on the Obama administration’s willingness to place Chrysler LLC into court protection to safeguard union health-care benefits.
GM bondholders proposed April 30 they get a 58 percent ownership stake in the Detroit-based automaker in exchange for their $27 billion in unsecured claims. Bondholders are objecting to GM’s proposal they get a 10 percent share of GM equity while a union health fund would get $10 billion in cash and as much as a 39 percent stake for $20 billion in unsecured claims.
Now the math is pretty simple. If the union health fund would get $10 billion in cash and as much as a 39 percent stake for $20 billion in unsecured claims and bondholders have $27 billion in unsecured claims, using the same formula the bondholders should get $13.5 billion in cash and a 53 percent stake.
That would seem fair – but no one said the Democrats or President Obama would be fair.