* Small bondholders demand equal treatment
* Say GM bond exchange offer is unfair
By Nick Carey
WARREN, Mich., April 29 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
"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
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
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
"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
"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
"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
He had come to satisfy his curiosity, he said.
"Our world is collapsing," Bolino said. "I wanted to
(Editing by Jan Paschal)