GM says debtholders support new revamp plan

General Motors Corp. said a group of its debtholders are supporting a new proposal that would see them get 10 per cent of the equity in a revamped GM, plus warrants to acquire another 15 per cent stake.

GM said an unofficial committee of bondholders is backing the proposal.

Under the proposal, a new GM would be created that would acquire the assets from the current GM after a restructuring under bankruptcy protection.

The U.S. Treasury would hold 72.5 per cent of the new GM, while a United Auto Workers benefit trust would hold a 17.5 per cent stake. The remaining 10 per cent would go to current GM debtholders.

The governments of Canada and Ontario will be in line to get an equity stake in the new GM based on the amount of money they contribute in loans to the company.

In a regulatory filing with the U.S. Securities and Exchange Commission, GM said that the U.S. Treasury has stipulated that the debtholders have until 5 p.m. ET on May 30 to accept the plan. If the debtholders don't support the plan, the amount of equity they could get would be "substantially reduced or eliminated."

"The U.S. Treasury has indicated that if these statements of support are not received, the amount of common equity and warrants that it would propose be issued by New GM to Old GM would be substantially reduced or eliminated," the automaker said in its filing.

The plan would see GM's overall debt reduced from $67 billion US down to about $17 billion. The new GM would also have about $9 billion in preferred shares.

About $8 billion of the $19.4 billion that the U.S. government has loaned to GM would remain on the company's books, with the rest converted into equity.

Earlier this week, debtholders who are owed $27 billion by GM turned up their noses at a previous debt-for-equity swap proposal.

GM has a June 1 deadline imposed by the U.S. government to come up with a restructuring, although the company is still widely expected to file for creditor protection.