The major development in the General Motors story was the bondholders' rejection of a deal that would trade their $27bn in debt for a 10% share of ownership in the restructured company. CBS' Anthony Mason talked to Jim Modica, one of those bondholders, whose $700,000 purchase of paper was about to be wiped out. Modica calculated that GM's stock price would have to climb to $329 in order for him to be made whole by the deal. The stock currently sells for $1.15.
"It now appears inevitable that General Motors will declare bankruptcy," CNBC's Phil LeBeau announced on NBC. He called the collapse of the bonds-to-stocks deal "the final straw." Altogether the automaker has $88bn in debt and obligations, he reckoned, including $20bn in loans from the federal government. ABC's Chris Bury anticipated that the USTreasury would pony up a further $50bn if bankruptcy happens, ending up with a firm that is 70% nationalized. The healthcare plan for retired union workers has already given up $10bn: "Dental and vision coverage ends June 1st."
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