WARREN, MICH., AND LOS ANGELES — Dennis Buchholtz spent a lifetime in the automotive industry, working at companies that supplied parts to America's automakers. For more than three decades, he spent his days casting iron dies used to turn sheet metal into fenders, roofs and hoods.
He left the business with no pension and no 401(k) -- only an unshakable faith in the ability of Detroit's Big Three to survive even the worst of economic times.
So when he and his wife, Judy, were weighing how to safely invest their retirement savings, they instinctively turned to the industry's biggest player, General Motors Corp.
Four years ago, Buchholtz sank about a quarter of the couple's savings into GM bonds, a decision that followed a long-standing tradition among auto workers to invest in an industry that had afforded so many of them a comfortable, middle-class lifestyle.
For their $98,000 investment, the couple received $7,000 in interest payments each year. It was enough to cover their utility bills, buy some groceries and pay the property taxes on their home -- just three blocks from GM and Chrysler factories. When the bonds reached maturity after 13 years, GM would return their $98,000.
Now Buchholtz's faith has evaporated along with the couple's savings.
As the troubled automaker scrambles to slash its more than $27 billion in unsecured debt to avoid a June 1 bankruptcy deadline, the Buchholtzes and thousands of other small investors are finding themselves in an untenable position.
They have two choices: Accept a GM offer to swap their bonds for stock at a loss, or hold out and hope that in a potential bankruptcy, they'll receive more than the automaker now offers. Either way, they have no hope of getting back their full investment and little say in what happens to the company because they hold a relatively small piece of its debt.
"If this deal goes through, we're wiped out," said Dennis Buchholtz, 67, sitting in his living room with Judy, 61. "We're too old to recoup. Who's going to hire me?"
The bondholders include former auto workers, schoolteachers, stay-at-home parents and other people who "are financing their retirements, school payments for their children and medical expenses with bonds purchased from the icon of corporate America," said Amy Noone Frederick, vice president of the 60 Plus Assn., which is helping organize investors.
Small voices
