United Auto Workers, taxpayers to own most of General Motors?

Taxpayers and the members of America's most storied unions could soon own up to ninety percent of the nation's largest company under a plan introduced today by its CEO to keep the company afloat as it tries to restructure itself:

G.M. said it could eliminate $44 billion in debt by exchanging stock for its bonds and by converting debts owed to the Treasury Department and to a retiree health care fund for the United Automobile Workers union into stock. The Treasury and the U.A.W. would own up to 89 percent of the company’s outstanding shares, while bondholders would hold 10 percent.

The Treasury would own more than half of G.M. on its own and therefore have control over the election of its board and other matters requiring the approval of shareholders.

General Motors will also stop offering its Pontiac brand in addition to shuttering Hummer (thank goodness), Saturn, and Saab, which had already been planned.

The company warns that if the exchange idea doesn't work out, it'll head into bankruptcy court, which would not be ideal for bondholders.

In the event that GM does not receive prior to June 1, 2009 enough tenders of notes to consummate the exchange offers, GM currently expects to seek relief under the U.S. Bankruptcy Code. GM is considering its alternatives in seeking bankruptcy relief in consultation with the U.S. Treasury, GM's largest lender. If GM seeks bankruptcy relief, noteholders may receive consideration that is less than what is being offered in the exchange offers and it is possible that such holders may receive no consideration at all for their notes.

After the exchange (if it goes through) current shareholders would own a mere one percent of the company. Imagine that - the world's biggest car company owned primarily by taxpayers and union members.

It sure would give new meaning to the phrase "publicly owned".