GM bondholders propose counteroffer, seek majority stake

— -- The bondholders' counterproposal follows a much less generous offer from GM on Monday. GM is working furiously to reorganize and shrink its teetering debt load before a government-imposed restructuring deadline a month away.

The committee said under its proposal GM's bondholders would take a 58% stake in a reorganized automaker. That would leave a union-run health care trust with a 41% stake and current equity holders with 1%.

The proposal leaves the U.S. government without an equity stake in the new GM and saves taxpayers $10 billion, the bondholders said. They said it is fairer than GM's proposal because it allocates equity to the United Auto Workers union and to the bondholders based on how much money they are owed.

The counterproposal comes in response to GM's offer earlier this week to give its bondholders 225 shares for every $1,000 held in bonds. Bondholders have criticized the plan, saying it would leave them with just pennies on the dollar for their 10% equity stake.

The U.S. government, under GM's plan, would get a 50% equity stake in exchange for about $10 billion in loan forgiveness. The UAW, for its part, would get a 39% stake in exchange for $10 billion in payments to its health care trust in stock.

"Unlike the current proposal, our plan does not grant a controlling interest in GM to the federal government," Eric Siegert, a financial adviser to the bondholder committee, said in a statement. "We do not believe that nationalizing one of America's largest and most important companies is the right policy decision for our country."

GM spokesman Tom Wilkinson said in an e-mail that GM has already launched its debt-for-equity exchange and is proceeding with its previous offer.

GM must bring 90% of bondholders on board with the plan for it to work, the company said.