GM looks to begin restructuring $27 billion of unsecured debt in March

By Angela McDaniels

Tacoma, Wash., Feb. 17 - General Motors Corp. plans to restructure its unsecured debt as part of the updated plan it presented to the U.S. Treasury on Tuesday, according to a company news release.

Tuesday's plan provides a review of the company's restructuring and is the first of two status reports required by the loan agreement reached by GM and the U.S. Treasury on Dec. 31.

About $27 billion in unsecured public liabilities currently on the company's balance sheet will be converted to a combination of new debt and equity for a net debt reduction of at least $18 billion.

The company anticipates that an exchange offer for its bonds will begin in late March and will be completed in May.

GM said that under the proposed restructuring plan, a substantial majority of its pro forma equity would be distributed to exchanging bondholders and the UAW voluntary employee beneficiary association.

Tuesday's update also discusses the issue of bankruptcy as a potential option for restructuring, the release said. GM has concluded that bankruptcy would be a "highly risky, extremely costly and time-consuming process" and not in the best interests of the company or its stakeholders.

The Detroit-based automaker said that since the original plan submission on Dec. 2, it has initiated bond exchange negotiations with bondholder committee advisers and exchanged term sheets with advisers for the bondholder committee and the UAW.

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