* Small bondholders demand equal treatment
* Say GM bond exchange offer is unfair
By Nick Carey
WARREN, Mich., April 29 (Reuters) - Individual bondholders of General Motors Corp (GM.N) on Wednesday lambasted the latest offer from the struggling U.S. automaker to exchange bonds for shares, saying they have been shut out of restructuring plans in favor of the U.S. government and organized labor.
"What they've offered us is ridiculous," said Chris Crowe, 50, a Denver, Colorado-based home inspector at an event organized for small bondholders in this Detroit suburb. "I know there are only so many pieces of pie, but they're giving us crumbs."
Crowe holds GM bonds with a face value of $10,000 and said he had bought GM paper to pay his son's college tuition, plus property taxes due in May.
"If I don't get that money, I'm going to have some serious problems," he said.
Around 200 people attended the event, organized by Warren Mayor James Fouts and the 60 Plus Association, an advocacy group for Americans aged over 60, to provide a forum for GM's 100,000 individual bondholders.
"Simply put, they need a seat at the table," said 60 Plus vice president Amy Noone Frederick. She emphasized that these bondholders are ordinary Americans who have invested money to pay for schooling or fund their retirements.
In remarks greeted with cheers, Fouts said, "I don't believe GM is above the law. Everyone has to be treated fairly."
GM has a June 1 deadline by which it must slash labor and debt costs, plus prove its viability as a going concern, if it is to receive further emergency aid from the U.S. government and survive a downturn that has pushed sales to decade lows.
Earlier this week, GM offered bondholders a 10 percent stake in the company in return for the $27 billion of debt.
The United Auto Workers union would get a 40 percent stake in the restructured company, which would cover half of the $20 billion GM owes the union. The U.S. government would convert about $10 billion of the $15.4 billion in emergency aid it has pumped into the automaker to help keep it afloat.
Small bondholders said they want GM to survive, but the deal tipped the scales in favor of the UAW and the government.
"That offer doesn't seem fair," said retiree Dennis Buchholtz, who invested $98,000 in GM bonds and relies on the $150 a week he receives in interest to help fund his retirement. "We have invested twice as much as the government and we'll only get a fifth of what the government will."
U.S. automaker Chrysler LLC -- 80 percent controlled by private-equity firm Cerberus Capital Management LP [CBS.UL] -- has also received emergency federal aid and faces a Thursday deadline to cut debt and labor costs, plus cement an alliance with Italian automaker Fiat SpA FIA.MI -- or face possible liquidation.
"I'm equally as mad at GM as at the government because GM has done nothing more than give the UAW and the government what they want," said retiree John Milne, who holds GM bonds with a face value of $20,000. He was standing at the back of the room holding a sign saying, "GM bondholders must have a say."
"I came here because this is the only place where small bondholders can be heard," he added. "We've been shut out of this entire process."
John Sion, 47, who is retired following a career at the Chicago Board of Trade and bought $700,000 of GM bonds to help fund his retirement, said all that individual bondholders want is a right to negotiate terms.
"But so far all we hear back from the government is deafening silence," he said.
Clifford St. Pierre, a retired Chrysler executive, said he and his wife Patricia invested $200,000, or 80 percent of their retirement fund, in GM bonds.
"All we want is a fair and equitable settlement to help us eventually recoup our investment," he said.
The U.S. auto industry's sales have fallen to the lowest level in three decades, as the vaunted American consumer has been battered by the recession and the credit crunch, which has limited access to auto loans.
Unlike Chrysler and GM, Ford Motor Co (F.N) has not sought emergency government aid, insisting it can restructure its business and weather the downturn on its own.
Standing at the back of the room was Tony Bolino, 76, who is neither a bondholder nor has he ever worked for the auto industry.
He had come to satisfy his curiosity, he said.
"Our world is collapsing," Bolino said. "I wanted to witness history." (Editing by Jan Paschal)