The Obama administration estimates that a General Motors bankruptcy would take at least 60 to 90 days and perhaps longer to complete, a senior official said Thursday.
The official, who spoke on the condition of anonymity because he was not authorized to discuss the matter publicly, would not confirm a specific bankruptcy scenario, but the government's deadline for any filing is on Monday.
President Barack Obama is expected to discuss the automaker's restructuring at that time, the White House said.
On April 30, Obama announced that Chrysler was seeking Chapter 11 protection. Chrysler, GM's smaller rival, is on the verge of stepping out of court protection.
GM and Chrysler are operating under the direction of a White House/Treasury Department task force, which has provided more than $36 billion in bailout assistance to the automakers and their affiliated finance companies.
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The official said GM , a publicly traded company with a global footprint, is more complex than privately held Chrysler and would take longer to reorganize in court, even under the expedited strategy the government has mapped out.
"I think the 60-to-90-day time frame is a better time frame to establish than something that looks like Chrysler," the official said.
GM would be a private company for some time, under the government's restructuring roadmap, the official said.
The official also said that total new U.S. government aid to GM, including any debtor financing in bankruptcy, would top $30 billion. The Canadian government would also offer some $9 billion.
The U.S. government stands to own more than 70 percent of the new company once restructuring is complete, and the United Auto Workers 20 percent. GM will also turn over its board, but some members are expected to stay on, the official said.
The government's goal for GM is to eventually return it to profitability, allowing it to eventually sell its shares. But the risks for taxpayers are daunting, with U.S. auto sales near their lowest level in 27 years.
"We will come out of this rid of some of the historic legacy costs that have been dragging us down for the last 20 years or so," GM Vice Chairman Bob Lutz said Thursday at an Automotive Press Association luncheon in Detroit. "We will come out of it with an all new focus on product development."
The revised offer to the holders of $27 billion in unsecured GM bonds amounted to a take-it-or-leave-it ultimatum: Go along with what the government auto task force's proposal or be left holding the assets a new GM doesn't want—ones with presumably little value at all.
In addition to the 10 percent of the stock in a newly formed GM that was originally rejected by bondholders, the new offer would give them warrants to acquire an additional 15 percent stake at a deep discount.
That would come only if they agree to support selling the company's assets to a new company under bankruptcy court protection.
The Securities and Exchange Commission filing said that if enough bondholders don't agree to support the sale by 5 p.m. Saturday, the amount of stock and warrants they get would be substantially reduced or eliminated. The filing didn't specify how much support is needed.
The government had demanded that 90 percent of GM's bondholders agree to a previous debt-for-equity swap that failed.
The Obama administration official said the government would not require a specific percentage of bondholders to approve the new proposal but would make a judgment call based on the level of support. About 15 percent of bondholders had agreed to the previous proposal, the official said.
Combined with the approval of a bondholders committee and other large debtholders that collectively hold about 20 percent of GM's unsecured debt, the government now expects at least 35 percent support, the official said.
The committee said it would go along with the new deal, but it was still unfair.
"While the committee continues to remain troubled by preferential treatment that the UAW VEBA is receiving compared to the bondholder class -- rejecting this offer in the expectation that the bondholders will do better in a litigated outcome was a risk the committee is unwilling to take," the committee said in a statement.
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A coalition of retail bondholders, meanwhile, continued to oppose the offer. The group said the new offer remained unfair to retirees who depend on GM bonds for income and was overly favorable to the UAW.
"From the beginning there's been a lack of transparency in this entire restructuring process," said Jim Martin, president of the retiree group 60 Plus Association, in a statement.
"No one seems to have the best interests of small bondholders at heart." United Auto Workers President Ron Gettelfinger, in a telephone interview with The Associated Press Thursday, said he didn't want to get into a debate with bondholders while the union is pushing for ratification of concessions to GM.
"An objective person that stood back and looked at all the sacrifices that have been made by active workers and retirees would see that we have made tremendous sacrifice," he said.
The union's role, he said, was to get the best deal it could for active members and retirees. Under the proposal, GM would enter bankruptcy protection and its good assets would be separated from bad ones.
Members of the United Auto Workers, meanwhile, were voting Thursday on an agreement that would give the union a stake in GM in return for concessions. Initial tallies suggested the rank-and-file workers would ratify the deal.
In an interview with Reuters, Gettelfinger said he expected the process to be complete by 4 p.m. EDT Friday and predicted the beleaguered automaker would be "a much stronger company" after restructuring.
The U.S. Treasury, which already has lent GM $19.4 billion, would get 72.5 percent of the new company's shares and provide $30 billion in additional financing needed to keep the new GM operating while its reorganization plan is reviewed by a bankruptcy court judge and the old GM is liquidated.
The Canadian government was expected to provide an additional $9 billion, the Obama administration official said.
A United Auto Workers' retiree health care trust fund will get 17.5 percent and the old GM, effectively owned by the unsecured bondholders, would get a 10 percent stake.
The plan envisions the slimmed-down new GM, shorn of more plants and brands, would have $17 billion in long-term debt and $9 billion in debt-like preferred shares.
That would represent a 61 percent decline from its existing debt load of about $67 billion. Only $8 billion of the existing U.S. government loans would remain on the books; the remainder would be converted into equity and preferred shares of the new GM.
The deal would wipe out GM's $27 billion in unsecured bond debt, converting to equity a total of $50 billion in company debt.
GM's filing said that if the deal goes through, the new GM would emerge with a total of $17 billion in debt -- $8 billion owed to the U.S. government, $2.5 billion to the UAW trust and $6.5 billion in mainly overseas and capital lease debt.
The Obama administration official said the holders of GM's $6 billion in secured debt would be "protected" but declined to elaborate.
Trading of GM shares was halted for a short time Thursday morning, but resumed to fall 2 cents to $1.12 in afternoon trading.
Opel Saga Continues
In Europe, Germany's goal of shielding Opel from GM's imminent bankruptcy hit a road block, raising the risk of insolvency for the German carmaker.
German Foreign Minister Frank-Walter Steinmeier said he would talk to US Secretary of State Hillary Clinton later in the day, after German ministers emerged from 12 hours of talks having failed to strike a deal to provide Opel with temporary financing in the event of a GM bankruptcy.
"(I will) urgently ask that attention is directed at Opel in the coming hours," he said.
The battle for Opel has effectively narrowed to a race between carmaker Fiat and auto parts supplier Magna, but it remains unclear whether Opel will be drawn into GM's bankruptcy.