GM prepares for bankruptcy protection announcement

DETROIT — General Motors Corp. was making final preparations Sunday for its bankruptcy protection announcement after bondholders accepted a sweetened deal, smoothing the way for the company's reorganization.

A statement from a group of large, institution bondholders Sunday said 54 percent of the GM bondholders agreed to exchange their unsecured bonds for a 10 percent stake in a newly restructured company, plus warrants to purchase a greater share later. Their acceptance is seen as critical in moving the company through bankruptcy quickly.

GM and the Treasury Department, which has been guiding the Detroit automaker toward a rescue plan that will give taxpayers a stake of nearly 75 percent in the company, were quiet on the bondholder's decision.

The Treasury Department must find that there is sufficient acceptance for the deal to move forward. In a previous bond exchange offer, the Treasury demanded participation of 90 percent, a debt exchange of $24 billion. The 54 percent who agreed to the revised deal, represent only $14.6 percent of GM's unsecured debt.

The company has not confirmed it will seek bankruptcy protection, but Chief Executive Officer Fritz Henderson has scheduled a news conference Monday morning in New York. President Barack Obama is also expected to give a speech addressing the Detroit automaker's fate.

The company made a huge stride toward restructuring Friday when the United Auto Workers union agreed to a cost-cutting deal, and early Saturday, Germany's finance minister said a plan was approved for Canadian auto parts maker Magna International Inc. to move ahead with a rescue of GM's Opel unit.

GM is racing to meet the government's Monday deadline to qualify for more aid. It already has received about $20 billion in government loans and could get $30 billion more to make it through what is expected to be a 60-to-90 day reorganization in bankruptcy court.

Treasury Secretary Timothy Geithner, who was traveling to China, followed developments closely taking a military aircraft with the latest in communications equipment that allowed him frequent contact with Steven Rattner, head of the administration's auto task force, and Obama economic aide Lawrence Summers.

The Treasury on Thursday offered bondholders 10 percent of a newly formed GM's stock, plus warrants to buy 15 percent more to erase the debt. Last week, GM withdrew an offer of 10 percent equity after only 15 percent of the thousands of bondholders signed up.