WASHINGTON (AP) -- Bondholders of General Motors Corp. could end up with nothing if they fail to work out a debt exchange crucial to the automaker's revival, a Michigan senator said Wednesday.
Sen. Carl Levin, a Democrat, said if GM's bondholders "refuse to work out a deal, they will likely end up empty-handed."
GM is required to reduce its roughly $28 billion in unsecured debt by two-thirds under the terms set by the outgoing Bush administration in December.
The Detroit automaker, which is trying to restructure with billions in government loans, has offered bondholders some stock in the company in exchange for a portion of its unsecured debt. Bondholders have been reluctant to accept concessions that would leave them with only a small portion of the face value of their bonds.
Bondholders, however, run the risk of losing everything in a bankruptcy proceeding, and have discussed whether the government would guarantee new bonds that GM would issue as part of its reorganization.
Levin, in a statement, said he expects an announcement from the Obama administration's auto task force "within the next week" that will include "some specificity and conditionality and will also be intended to provide ongoing support to the auto industry."
The panel is reviewing $17.4 billion in loans to General Motors and Chrysler LLC and requests for billions more. They are expected to provide a framework for restructuring the companies by March 31.
GM and Chrysler have been trying to win concessions from union workers and debtholders to complete their restructuring plans.