GM's Debt Denial

Posted by Jen Lynch

By Joann Muller and Brian Wingfield, Forbes

General Motors apparently does not plan to make a $1 billion debt payment June 1. That's what GM Chief Financial Officer Ray Young told a Wall Street Journal reporter at a business lunch in Detroit Wednesday.

A surprise? Hardly. By June 1, GM will either have reached a deal with bondholders to restructure its debt under a government-supervised restructuring, or it will be in bankruptcy. Either way, it won't be making that scheduled debt payment.

GM is trying to reduce $27 billion in debt to $9 billion, and it hopes to have a bond exchange underway in the coming weeks. "That exchange could still be in process on June 1," says GM spokeswoman Renee Rashid-Merem. "In which case, we would not expect to make the June 1 Series D bond payment."

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