Treasury and the UAW will own GM... and Versailles tolls the death knell.
I thought this would be posted by now:
But the dramatic move means that at least temporarily the U.S. government would have the right to call all of the shots at the Detroit automaker -- as part of its $15.4 billion in loans to GM to date. GM said today it expects to receive another $11.6 billion in loans from the government this year.
"As a result of its ownership of GM common stock, the U.S. Treasury will be able to elect all of our directors and to control the vote on substantially all matters brought for a stockholder vote," GM said in a statement. "In addition, through its stockholder voting rights and election of directors, and its role as a significant lender to us, the U.S. Treasury will be able to exercise significant influence and control over our business if it elects to do so."
But the point completely overlooked in this story, and dismissed in the other elegies made today (and I swear if I hear the theme to Route 66 one more damn time...) -- the UAW would own 38 percent of GM.
Isn't this what activists urged unions to do -- be part of a company in the only way capitalism respects, as a shareholder?
“We believe the offer to be a blatant disregard of fairness for the bondholders who have funded this company and amounts to using taxpayer money to show political favoritism of one creditor over another,” the ad hoc committee of GM bondholders said today in a statement.
Bondholders are being asked to swap all their claims for 10 percent of the equity in the reorganized company. The offer is contingent on cutting at least half of GM’s $20.4 billion of obligations to a United Auto Workers retiree-medical fund, known as a Voluntary Employee Beneficiary Association, through a debt- for-equity exchange that would give the VEBA as much as 39 percent of common stock in the Detroit-based carmaker.
So one can either be on the side of gamblers who lost their bet that GM would make more and larger profits, or on the side of union workers who now have to pull a company out of bankruptcy so their fellow workers can have pensions and health insurance. Oh, how to pick a side?
From this snippet, it's apparent that the ones who had the sweetheart deal before were bondholders:
Before Wagoner was removed, GM had proposed that bondholders swap more than three-quarters of their stake for equity, according to a person familiar with the talks. That offer would have given bondholders 90 percent of the equity of the reorganized automaker and a combination of cash and new unsecured notes, the person said at the time.