Bondholders holding some $27 billion of General Motors Corp
The open letter to U.S. Treasury Secretary Timothy Geithner and other members of the U.S. autos task force marked an escalation for GM bondholders who have been arguing for weeks that the automaker's proposed restructuring would leave it too heavily indebted and facing an uncertain economy.
We are concerned that the company is putting too much faith in a near-term turnaround in the economy that would enable annual car and truck sales to reach previous levels, representatives of GM bondholders said in the letter.
GM's restructuring plan as presented by the company on February 17 might go far enough to keep it out of a court-supervised bankruptcy, the letter said.
We do not know if the plan would, in fact, keep the company out of bankruptcy, it said.
The financial and legal advisers to GM bondholders said they had not had a response from U.S. officials or GM since proposing terms for a debt swap earlier this month and warned that time was running out to meet an end-March deadline for a debt reduction deal for the struggling automaker.
Keeping lines of communications open is the only way we all can meet the March 31 deadline for a debt-to-equity exchange, the letter said. We are disappointed that we have had no response to our proposal from either GM or the auto task force.
The letter on behalf of GM bondholders was signed by advisers to an ad hoc committee negotiating a debt restructuring with the automaker that was prompted by the terms of the $13.4 billion bailout approved by the Bush administration.
GM has asked the Obama administration for up to $30 billion in total U.S. government funding and has until end March to demonstrate that it can be made viable with new aid and concessions from creditors and the United Auto Workers union.
Houlihan Lokey Howard & Zukin Capital Inc has been working as the financial adviser to a committee of GM bondholders.
The law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP has also represented the creditor group as counsel.
(Reporting by Kevin Krolicki, editing by Maureen Bavdek)