GM eyes possible bankruptcy: WSJ

WASHINGTON: Troubled US automaker General Motors is set to renegotiate a less advantageous deal with bondholders to restructure its debt, but a bankruptcy declaration remains more likely, US media reported on Friday.

"GM's restructuring could play out in one of two ways. It could successfully negotiate cost-cutting concessions with unions and bondholders so it can become viable outside of bankruptcy. Or, in the more likely scenario, it will reorganize by filing for Chapter 11" bankruptcy, The Wall Street Journal reported, citing unnamed people familiar with the situation.

The Treasury Department is pressuring GM to offer its bondholders "a small portion" of company shares, the Journal said, noting that the new deal marked "a sharp cut" from a bond-exchange offer by GM two weeks ago.

The earlier deal had provided about $ 8.5 billion in cash and new debt in GM, on top of 90 per cent of company stock.

The Treasury "believed the earlier plan was too generous to bondholders," the Journal said, citing people familiar with the matter. GM has already received $ 13.4 billion from the federal government to help shore up the company.

The new offer could be presented "as soon as next week," the newspaper said, warning that is "sure to face strong resistance from bondholders."

The plan would also split the company into a "New GM" that would have the company's more promising brands, such as Chevrolet and Cadillac, and an "Old GM" with brands facing trouble.

GM has until late June to give the government a restructuring plan, on which additional federal aid would hinge.