GM Preparing to Make Official Bond Exchange Offer

CNBC.com General Motors

General Motors says its preparing to launch a public bond-exchange offer that would let the company start slashing its debt, even without an agreement from a committee of large institutional bondholders.

The Detroit automaker has been working on a plan to wipe out most of its $28 billion unsecured debt by June 1 to avoid bankruptcy.

GM spokeswoman Julie Gibson said Thursday that the only way to reach the company's thousands of bondholders before the government deadline is to formally offer a debt exchange and see who accepts it.

She declined to reveal any details about the terms of the offer.

Some of GM's largest bondholders formed a committee to negotiate a debt exchange with the company. But they haven't met with the company since March, and its unclear if they will have any say in GM's offer.

The bond action comes as GM says it  will provide an update on its restructuring plans on Friday. This meeting may include details on the sale of its Hummer brand, as well as other steps it is taking to avoid bankruptcy.

Earlier Thursday, there were reports that dealers had accelerated their timetable for closing about 1,700 dealerships. According to people with knowledge of the talks, several meetings were held with key dealers and representatives of the National Automobile Dealers Association, GM executives also said about 200 dealerships had closed in the first quarter, according to people briefed on those talks.

The sources asked not to be named because of the sensitive nature of GM's discussions with its cash-strapped dealers.

GM's media update will include comments from GM Chief Executive Fritz Henderson.

In addition to steps being taken with its dealerships and Hummer, GM is trying to sell its Saab and Saturn units.

Saab said Thursday it has signed confidentiality agreements with 27 potential suitors.

There also are said to be several interested potential investors in its troubled Hummer SUV brand and it is expected GM will receive an offer to keep the brand running, one of the people familiar with the discussions said.

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