For GM investors, a gathering of misery

There will be some who will say he should have known better, but that doesn't change the fix that Jim Modica finds himself in.

Modica, 68, bet his retirement on General Motors Corp. Now, it seems, he lost.

The Long Island retiree holds about $700,000 in GM bonds, his life's savings. At this point, Modica fears that his holdings are virtually worthless.

"We've been decimated," said Modica, a retired employee-benefits adviser, describing his family's predicament.

Modica was at the National Constitution Center yesterday with a traveling crew of other GM bondholders who are desperately trying to have their plight considered as the Obama administration works to rescue the automaker.

GM is seeking to stave off bankruptcy by cutting $44 billion in debt. It has until June 1, a deadline set by the administration, which has given the company $15.4 billion in federal loans.

Under its restructuring plan, GM is seeking to trade equity for debt. The government would get 50 percent of the company, the United Auto Workers 39 percent, and bondholders 10 percent. The remaining 1 percent would go to stockholders.

Bondholders originally purchased $27 billion worth of bonds. With the company now worth less than $1 billion, their 10 percent share would be worth about $100 million, or pennies on the dollar.

For Modica, that means a loss of about $80,000 in annual retirement income, he said. And there is $700,000 more that his sons lost, investments in GM that he urged them to make.

"We did this as a family," he said. "We had discussions about safe investments."

They concluded that, given how many cars are purchased, an automobile company represented a secure place to put money.

"We thought, Who is the No. 1 carmaker in the world? GM," he said. "These bonds seemed like a sure bet."

As it turned out, they weren't.

Modica wasn't alone in his loss yesterday. His brother, Mark, from Chalfont, was there. He invested $150,000 in GM bonds.

Joan and Maurice Pryor, a couple in their 70s, came from Essex, Conn., to be there as well. They have less on the line - about $25,000 - but it has been no less a trauma.

"We thought this would be a very sure and safe investment," Joan Pryor said. "What a disaster, huh?"

The Pryors, like the Modicas, are reconciled to the fact that they may never see most, if not all, of their money again. That didn't stop them, though, from hoping to have their grievance aired.

"They need a seat at the table," said Amy Noone Frederick, vice president of the 60 Plus Association, an advocacy group for older Americans that has organized the GM bondholder protests.

The group held a news conference in Detroit last month. Another is planned for Washington next week. The ultimate hope is that GM and the administration will adopt a counterproposal that would make bondholders 58 percent stakeholders in the company.

After the news conference yesterday, these small stakeholders were returning home to rather ordinary lives.

Chris Crowe, 50, was flying back to Denver to pick up with his home-appraisal business. He is down $10,000 - college funds for his 13-year-old son.

"If I don't get it back, it will hurt; $10,000 is a lot of money for me," he said. "I worked very hard to put it aside. It will take a long time and a lot of work to recoup it."