UPDATE 1-GM bondholders, Obama auto team to meet Thursday

* GM bondholders to meet with Obama autos team Thurs
* Bondholders focused on keeping GM out of bankruptcy
* Guarantee of bond debt one of issues up for talks

(Adds details on U.S. autos task force, GM bondholders'
concerns, other background)
By Kevin Krolicki
DETROIT, March 3 (Reuters) - Representatives of General
Motors Corp bondholders are scheduled to meet on
Thursday afternoon with members of the Obama administration
task force overseeing bailout plans for the troubled U.S. auto
industry, a person familiar with the plans said on Tuesday.
Bondholders representing some $27 billion in GM's debt have
raised a range of concerns about the automaker's restructuring
plan but are committed to trying to find a way to keep the
automaker out of bankruptcy, the person said.
One of the proposals on the table for discussion would have
the U.S. government offer debt holders some guarantee in
exchange for accepting a lower payout, according to the person
who asked not to be identified because of the confidential
nature of the talks.
GM has until the end of this month to clinch a deal with
the United Auto Workers and bondholders to reduce its unsecured
debt by a total of $28 billion under the terms of its bailout.
The autos task force headed by U.S. Treasury Secretary
Timothy Geithner and White House economic adviser Larry Summers
is weighing up additional aid requests from GM and its smaller
rival Chrysler LLC at a time when auto sales near 30-year lows.
The team has met over the past week with executives from GM,
Ford Motor Co and Chrysler and is scheduled to meet in the
coming days with Sergio Marchionne, who heads Chrysler's
potential alliance partner Fiat SpA.
Thursday's closed-door meeting is expected to include
advisers to a committee of GM's bondholders and key officials
on the autos task force including former investment bankers
Steve Rattner and Ron Bloom.
It is not expected to include Geithner or Summers, the
person familiar with the meeting preparation said.
The Treasury Department has not commented on the auto
sector meetings since they began just over a week ago.
GM has borrowed $13.4 billion from the U.S. Treasury and
last month said it would seek up to $16.6 billion more.
The terms of GM's bailout approved by the Bush
administration require the company to cut its bond debt by
roughly $18 billion by swapping debt for equity. That amounts
to a payout of about 33 cents on the dollar.
But bondholders have raised several objections to those
terms, people familiar with the discussions have said. GM
bondholders have objected that the proposed debt swap terms
would force them to make a deeper concession than the United
Auto Workers union would have to make on payouts to a retiree
healthcare trust fund.
Some analysts have said the government could make the deal
more appealing for bondholders by guaranteeing new GM bonds at
a payout of 40 cents on the dollar.
But such an extension of a government guarantee would also
raise the price tag for keeping GM out of a court-supervised
bankruptcy process at a time when President Barack Obama faces
pressure to draw some limit on aid to the ailing banking and
auto sectors.
The UAW is owed roughly $20 billion in cash from GM for a
retiree healthcare fund. It faces pressure from GM to take half
of that in equity under the terms of GM's bailout.
(Reporting by Kevin Krolicki; Editing by Gary Hill and Matthew
Lewis)
((kevin.krolicki@thomsonreuters.com; + 1 313 967 1902))

Keywords: GM/BONDHOLDERS

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