WASHINGTON (Reuters) - The U.S. government wants to be as inactive a shareholder in General Motors Corp (GM.N) as possible if it ends up taking an ownership stake during a reorganization of the automaker, sources said on Tuesday.
“We are reluctant, somewhat involuntary shareholders in this situation,” one of the sources said. “We want to be shareholders for as short a period of time and almost in as inactive a way as we can responsibly be.”
The government would not engage in day-to day management of the automaker, in which it would take a majority stake, the source said. “We’re not going to put U.S. government people, employees on the board,” the source said.
GM, the largest U.S. automaker, is considered to be close to following Chrysler Corp into bankruptcy.
The sources said Chrysler, which entered bankruptcy on April 30, is nearly ready to emerge from it in restructured form but they refused to specify how soon.
“I wouldn’t want to speculate on a precise day but I think we’re pretty close to the end,” one of the sources said in response to a question on whether a reorganized Chrysler might be unveiled as early as this week.
GM bondholders have so far balked at a debt-for-equity swap that would be needed for the company to avoid bankruptcy, though the sources said the government feels they got a fair offer and still hopes they might sign on.
“We’re going to do everything we can ... to have peace in the valley and a happy outcome,” one of the sources said. “We certainly prefer peace in the valley, but not in a way that’s unfair to taxpayers or other stakeholders.”
GM has so far failed to gain anywhere near the 90 percent of bondholder support desired to stave off bankruptcy, two separate sources familiar with the discussions told Reuters earlier on Tuesday. Bondholders have until midnight to make their final decision on the tender.
The sources said that if GM does enter bankruptcy, the process will be more time-consuming than for Chrysler because of the complexity of GM’s global network. But the government would like to get out of an ownership stake once it was certain that taxpayers’ interests were protected in a going concern.
“We’re going to exit this investment as soon as we responsibly can in a way that’s both fair to the other stakeholders in the company as well as fair to the American taxpayers,” the sources said.
Reporting by Glenn Somerville and David Lawder