DETROIT - General Motors Corp. moved closer to bankruptcy today after it announced the failed deal with its bondholders to exchange their debt for equity in the company.
The bond exchange offer expired at 11:59 p.m. Eastern time Tuesday, and failed to reach the 90 percent participation required under the loan agreement with the U.S. Treasury Department.
GM had offered to exchange $27.2 billion in unsecured debt for 10 percent of the company’s stock. The offer translates into 225 shares of stock for every $1,000 in debt owed to bondholders. GM said in a statement no new offers would be offered to bondholders.
The failed deal puts more pressure on the automaker, which must restructure or file for bankruptcy by June 1, a deadline imposed by the Obama administration.
“Since these conditions, as well as certain other conditions, have not been satisfied, the exchange offers will not be consummated,” GM said. “The GM Board of Directors will be meeting to discuss GM's next steps in light of the expiration of the exchange offers.”