BUSINESS

GM in talks over debt-for-equity deal

Source:PTI
December 01, 2008 11:11 IST

Beleaguered American auto maker General Motors is in emergency talks with its lenders over a multi-billion dollar debt-for-equity deal which could save the company from filing for bankruptcy, a media report on Sunday said.

"General Motors is in emergency discussions with its lenders this weekend over a multi-billion dollar debt-for-equity deal that could save the iconic American car giant from a Chapter 11 bankruptcy filing," The Sunday Times said in a report published online.

The report said that the auto maker's chief executive Rick Wagoner "is scrambling to secure a deal by Tuesday, when he will make a fresh attempt to secure up to $12 billion (7.8 billion pounds) in financial aid from the US government."

According to the publication, Wagoner is trying to persuade some of the debt-holders to swap part of General Motors' $43-billion debt pile for shares, in a move that would shore up the balance sheet and reduce its crippling interest costs.

The auto maker has been paying nearly $2.9 billion a year in interest payments. Further, the company has lost about $13 billion in the first nine months of this year due to weak demand and restructuring costs.

"The new capital structure would form the basis of a new business plan for a much smaller, leaner business. If agreement can be reached this weekend the company could avoid seeking bankruptcy protection," the report noted.

American auto giants -- General Motors, Chrysler and Ford -- have been severely hit by the ongoing financial turmoil and have been seeking assistance from the US government to shore up their fortunes.

Source: PTI
© Copyright 2024 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.

NEXT ARTICLE

NewsBusinessMoviesSportsCricketGet AheadDiscussionLabsMyPageVideosCompany Email