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RHJ plays cool hand in Opel bidding

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GERMANY/RHJ International is playing a canny hand in the political poker match that is the sale of GM’s Opel. The Belgian financial investment house is keeping itself in the game by steadily upping the stakes, increasing the pressure on Berlin to take its bid seriously.

While the German government has so far thrown its considerable backing behind a rival offer for Opel spearheaded by Canadian car parts maker Magna, it has yet to force GM into a deal.

This is in no small part thanks to RHJ’s willingness to play a tough hand. After scrutinising Opel’s books, the investment firm on Wednesday increased the cash on offer for a 50.1 percent stake in Opel to 300 million euros and cut the amount it is asking for in state aid to tide Opel over for the next few years.

RHJ’s improved offer makes it considerably harder for German Chancellor Angela Merkel to justify pushing for a decision on the Opel sale ahead of the election on September 27.

GM coming to government’s rescue

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Bankruptcy has certainly been kind to GM. It’s now able to dig into its own cash reserves and help the government out.

Auto dealers, fed up with government’s tardiness in sending out the rebates, started abandoning the program since they’re hardly in a position to float the up to $4,500 a pop given to those exchanging their clunker for a new, more fuel-efficient car.

GM negotiator slams Opel bidder’s Russian connection

The GM blogger is at it again. John Smith, General Motors’ group vice-president and chief negotiator for the sale of its stake in Opel/Vauxhall, lays into the bid by Canadian-Austrian car parts maker Magna – especially the Russian Connection – in his latest update on the state of the talks.

He also pours cold water on happy talk from German politicians of an early decision in favour of Magna, backed by the German authorities, rather than rival Belgium-based financial investor RHJ International, which clearly still has GM’s preference.

GM sprung free and world still standing

They said it couldn’t be done and here we are less than 40 days after GM filed and the new leaner, possibly meaner, automaker has been sprung free from bankruptcy court.

I don’t want to downplay the hardship of the GM workers being left behind, but the much feared Armageddon just hasn’t happened, giving the Obama Administration a big win for making the politically risky move of allowing GM and Chrysler to go into bankruptcy in the first place.

Bankruptcy-related M&A at 5-year high – more to come?

This week’s Thomson Reuters Investment Banking Scorecard shows bankruptcy-related M&A at a five year high.

 

There were five bankruptcy-related M&A deals announced during the week, including the acquisition of venture-backed public company Nanogen by French investment holding company Financiere Elitech for $25.7 million. 

GM drives route 363, bondholders beware

     The rough justice meted out to General Motors bondholders may have short-circuited the bankruptcy process, but it has damaged the confidence that holders of other debt can have in their right to fair treatment.
    There will be a long-term cost, both to borrowers and lenders as a result. Key to this has been the use — by both GM and Chrysler – of section 363 of Chapter 11 of the U.S. bankruptcy code. By invoking the “emergency” need to restructure the companies, this section has allowed the automakers to speed through the sale of the viable parts of the businesses to new companies and leave the debt behind.
    While route 363 by-passes lengthy court hearings, its use to sell prime assets drives straight through the spirit of the code, which was meant to allow companies going through a Chapter 11 to jettison non-core assets quickly as part of a longer and wider reorganisation. It was not designed to cream off the best ones.
    Lawyers are already invoking the Chrysler and GM examples to try and get round long-established rules for reorganisations.
    The result would be to deprive bond investors of their rights in a company restructuring.
    GM bondholders who would normally have enjoyed preferred credit status in a Chapter 11 were railroaded by the Obama administration into giving the quick-fire sale the go-ahead, on the grounds that this was a one-off.
    From GM’s point of view, the process has worked well, allowing the business to emerge only 40 days after filing for bankruptcy. The cost of the turnaround has been $50 billion in emergency government financing. The longer-term cost in the much bigger market for corporate debt may be far larger.

from Neil Collins:

A haircut or a headcut for GM bondholders?

Bill Zastrow owns $240,000 of General Motors bonds. He's not happy, but, as he told Reuters' Kevin Krolicki, "We were getting the Marie Antoinette haircut and now it looks like it's a few inches higher."

The best guess is that his holding is now worth about $22,000, not far away from the sum he used to get in annual interest, but that's better than the zero-to-$12,000 which the earlier offer to bondholders implied.

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