GM prepares for bankruptcy protection announcement

DETROIT -- A statement from a group of large, institutional bondholders Sunday said 54% of the GM bondholders had agreed to exchange their unsecured bonds for a 10% 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 more than a 70% stake in the company, were quiet on the bondholders' 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% of bondholders, representing a debt exchange of $24 billion. The current 54% acceptance represents only $14.6 billion, but by lining up support in advance of a bankruptcy protection filing, GM is likely to find it easier to persuade a judge to apply terms of the sweetened offer to the rest of its 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 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 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.