US begins GM bankruptcy planning

General Motors and the US Treasury have improved the offer to GM's bondholders, as they prepare for the firm's move into bankruptcy protection.

The U.S. Treasury, which already has loaned GM $19.4 billion, would get 72.5 percent of the new company's stock and provide $30 billion in additional financing to keep the new GM operating under bankruptcy protection. Canada's government is expected to provide an additional $9 billion, a senior Obama administration official said.

Bondholders with $27bn of GM debt are now being offered the option to buy an extra 15% of GM shares as part of a proposed bankruptcy deal. The bondholders would get 10 per cent of the common equity of "New GM" and warrants that give them the right to purchase another 15 per cent of the reorganised firm, according to the filing. If bondholders back the new offer, it will allow GM to exit bankruptcy protection more quickly. The US car giant is expected to apply for bankruptcy protection by 1 June.

German Foreign Minister Frank-Walter Steinmeier said he had received assurances from US Secretary of State Hillary Clinton that the US government would increase its support to help secure the sale of Opel, GM's main European business, which has its headquarters in Germany.