Formerly About Advanced Micro Devices Message Board

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Politics : Formerly About Advanced Micro Devices

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To: combjelly who wrote (486103)	6/5/2009 9:14:58 PM
From: TimF	Read Replies (1) of 1573957

Chances are excellent if it wasn't for the government money, the dollars in play would have been far less. Perhaps, but that doesn't change the fact that the price paid includes the forgiven debt. The union and the two governments are going to have ongoing commitments to the new company. The other bondholders won't. I've left aside the government ownership rather than complicating the issue. The government ownership is justified not by any ongoing relationship, but by the fact that they are the only one's (with the possible exception of Fiat), putting forth new money for Chrysler, and the only ones bringing new money to the table for GM's North American operations. The unions had an ongoing commitment to or connection to the company long before these problems. Their role as a union, previously or ongoing, by itself only supports a 0% ownership claim. Their forgiving of some of the companies obligations to the workers in exchange for an ownership stake could justify some ownership. But the amount forgiven is less, and their junior creditors, so their justified ownership stake is much less. You haven't come up with any reason why the judge is going forward with this if it is illegal or even unusual. That wouldn't be much of a problem if it was true, and it isn't true. The judge is going along with it because he's following the pattern of the agreement by the creditors. Following the agreement of the creditors is quite normal. What's unusual is the nature of this specific agreement, and the steps used to get it. Most such agreements are not controlled by the government to give favors to the politically connected.

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