GM may skip $1B bond payment due to exchange offer
Detroit, MI – Detroit, MI (AP / Laura Weber, Michigan Public Radio Network)
General Motors says it may not make a $1 billion bond payment on June 1 if it doesn't finish a debt-for-equity exchange by then.
The troubled auto giant plans to make the exchange offer soon to
General Motors Corp. has $28 billion in unsecured bond
debt. The offer could come as early as next week.
GM says in a statement it would not make the payment if the exchange is still in progress June 1.
The company also could miss the payment if it enters bankruptcy protection.
GM faces a June 1 government deadline to reduce debt, cut labor costs and complete other restructuring steps.
Financial Chief Ray Young told reporters about the possible skipped payment after speaking at a Chinese auto industry conference Wednesday in Detroit.
Meanwhile, Governor Granholm says four major banks are trying to force Chrysler into bankruptcy in a move that could close the automaker for good.
The Obama Administration asked four banking giants to ease the debt on Chrysler to $1 billion.
The lenders made a counteroffer, holding Chrysler to a $4.5 billion debt, and asking for a 40% stake in a merger between Chrysler and Fiat.
Governor Granholm says that offer is offensive coming from the same banks that received federal bailout money to stay afloat.
The banks lending to Chrysler are J-P Morgan Chase, Goldman Sachs, Citigroup and Morgan Stanley.
The Governor says she sent letters to the heads of all four banks, asking them to make concessions for the automaker.