20% of GM's bondholders take sweetened offer

DETROIT -- The deal, brokered by the U.S. Treasury Department, will give shareholders a 10% stake in the new GM and warrants to buy 15% more of the automaker at a deep discount, the filing says. But the deal is contingent on GM filing for a section 363 bankruptcy, which would split the automaker into "good" and "bad" parts.

A person familiar with GM's plans said it is "probable" that the company would file for bankruptcy protection on Monday. The person didn't want to be identified because the plans were still under discussion with the U.S. and Canadian governments.

The government proposal is similar to the approach taken in the bankruptcy reorganization approach used by Chrysler. Its plan to shed assets and sell control of a downsized carmaker to Fiat, aided by government financial assistance, could receive final approval from a bankruptcy court judge in New York before the end of the week.

A senior Obama administration official estimated that GM would be under bankruptcy protection for 60 to 90 days, which is longer than Chrysler's reorganization because of the size and complexity of GM. The official spoke on condition of anonymity because of the sensitive nature of the ongoing preparations.

Remaining bondholders have until 5 p.m. ET Saturday to agree to the terms, which would erase $27.2 billion off GM's books. A group representing GM's biggest bondholders has already agreed to the terms.

In exchange for a larger share of the company, the bondholders agree to not oppose a sale of GM's good assets into the new company.

"Implementation of this proposal would result in a new GM with a healthy balance sheet, putting the new company on a clear path toward long-term viability and success," the company said in a statement.

Treasury would own about 72.5% of GM when it emerges from bankruptcy, according to the filing.