General Motors is expected to announce early Wednesday that only a small fraction of the holders of its $27 billion in bonds agreed to swap that unsecured debt for a 10 percent equity share of a recapitalized GM.
Reaching such an agreement was one of the requirements of the Obama administration, which already has committed $19.4 billion in aid and said it would only provide more funds if bondholders and unionized workers made concessions that substantially reduced GM's costs.
There was a small hope Tuesday that GM could avoid a bankruptcy filing when the United Auto Workers union disclosed that it would take a 20 percent stake in GM -- down from the original plan of 39 percent. That seemingly would have allowed the Detroit-based company to sweeten the pot for its recalcitrant bondholders.
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But GM's need for additional financing, as much as $50 billion sources tell CNBC, means a hefty investment by the U.S. government in the automaker, so that GM can reorganize. As such, the U.S. government will take up a 70 percent stake in General Motors, sources say. Additionally, in exchange for the roughly $8 billion in aid it is expected to pony up as well, the Canadian government also will likely receive a small stake in the GM.
