GM Makes Final Exchange Offer

General Motors, heavily supported by the US Treasury Department is now trying to make a last ditch effort to save itself from a long and costly bankruptcy process. After the initial exchange offer bit the dust earlier this week, the US government made a new proposal to the bondholders, which sources say has a bigger chance of being accepted.

The rejected offer called for the swap of a $27.2 billion of its secured debt for a 10 percent stake of the company's shares. The offer now on the table states that in addition to the 10 percent stake the bondholders will be given warranties to purchase another 15 percent.

This move has drawn the support of some 20 percent of GM's bondholders, Reuters reported. In exchange for this offer, creditors are also required not to oppose a move to sell GM's assets under the provisions of Section 363 on the US bankruptcy code. The offer is on the table until Saturday at 5 PM EDT.

The NEW GM will basically looks like this: the majority stake, accounting for 72.5 percent of the company's shares, will be owned by the US Government through the US Treasury Department. A trust fund affiliated with the UAW would own 17.5 percent, while the bondholders would get the remaining 10 percent of the company. In time, the bondholders will take over a quarter of GM's total shares.

The most important aspect of this whole deal is that for this to become a reality, GM needs to go under bankruptcy to complete the sale process. The American manufacturer has already released a statement through which it says it agrees with such an outcome.