General Motors has finished a key piece of business before a bankruptcy filing planned for tomorrow as the deadline for bondholders to accept an exchange offer brokered by the Obama administration expired.
The development came as GM's board met for a second consecutive day to review developments and finalise its plans for what has become the most widely telegraphed and carefully orchestrated bankruptcies in the history of American business.
GM would not comment on how many investors had expressed support for its bondholder swap that would give them up to 25 per cent ownership of a reorganized company in exchange for $27 billion in bond debt.
GM bondholders had until 5 pm yesterday to register their support for the deal. A group representing about a dozen major GM bondholders also had no comment.
Since last week, GM has been racing to complete a series of last-minute deals intended to help speed its way through a fast-track bankruptcy that would see it emerge under the majority ownership of the US government - at least for a short time.
Those deals have included a new contract for the United Auto Workers union (UAW) and an agreement to spare GM's Opel brand from collapse in a deal brokered by the German government.
Bondholders have been one of the last pieces to fall into GM's complicated bankruptcy puzzle under the direction of the autos task force appointed by the White House and headed by former investment banker Steve Rattner.
GM is readying a filing for Chapter 11 protection tomorrow and President Barack Obama is expected to discuss the government's unprecedented role in the remaking of an American industrial icon.
"My preference would have been to stay out of it completely," Mr Obama said in an interview with NBC News recorded on Friday at the White House and aired yesterday. "But the alternative was to see a liquidation, bankruptcy in which an enormous institution with huge importance to our economy simply gets broken up into pieces."
US officials said yesterday they welcomed a deal clinched by Germany with Canadian auto parts group Magna, GM and the US government to save German carmaker Opel from GM's imminent bankruptcy.
"This deal is a positive step for the auto industry. The auto task force will continue its close engagement with the German government on the issue," a senior administration official said.
In late March, the Obama administration put the automaker on 60-day notice to restructure and clinch concessionary deals with its union and bondholders.
The US government has pumped $19.4 billion in emergency funds into the Detroit-based automaker since the start of the year and plans to invest over $40 billion more.
The White House has said the speed of the bankruptcy proceedings for Chrysler since April 30th demonstrate the possibility of an orderly restructuring of a major US carmaker and could be a model for GM.
Reuters