The US government could take a majority stake in General Motors Corp as part of a last-gasp survival effort announced by the ailing carmaker Monday, which includes abandoning its Pontiac brand and a debt for equity exchange with bondholders, according to dpa. Facing a June 1 government deadline to prove its viability or face bankruptcy, GM said it would axe 23,000 jobs by 2011 - 7,000 more than previously planned - and would close down more factories and quicken the pace of cuts to its vast dealership network. Pontiac will be phased out by the end of 2010, leaving the automaker with four core brands. The sale or close of Saab, Saturn and Hummer, all of which had already been marked for deletion, will be moved up to the end of 2009. In a bid to cut 44 billion dollars in debt, GM also plans to offer creditors an up-to-10-per-cent company stake, while the government would exchange up to half of its emergency loans for a stake in the firm. Some employee benefits would also be converted into shares. But GM Chief Executive Officer Fritz Henderson said at least 90 per cent of bondholders would have to accept the new exchange by May 26 in order for it to go through. That is far from certain, meaning bankruptcy was still the "more likely" option, Henderson said. "We are taking tough but necessary actions that are critical to GM's long-term viability," Henderson said. "Our responsibility is clear - to secure GM's future - and we intend to succeed." President Barack Obama's government has already loaned GM 15.4 billion dollars and given the firm a strict deadline of June 1 to put its restructuring moves in place, or lose the loans and file for bankruptcy protection. Obama's task force on the car industry called the new plan "an important step in GM's effort to restructure its company." The administration said no final decision had been made on the future of government loans to the firm. Meanwhile, Chrysler LLC, the smallest and most endangered of the "Big Three" US automakers, announced a deal with union workers Sunday night as it faces a much-earlier Thursday deadline to prove itself viable or face bankruptcy. The tentative contract with the United Auto Workers must still be ratified by union members. Canadian union workers voted Sunday to accept an earlier deal with similar concessions on wages and benefits. GM has yet to reach a similar deal with the UAW. Chrysler is also still seeking billions of dollars in concessions from creditors before Thursday's deadline, which was imposed by Obama in exchange for interim financing to keep the company afloat earlier this year. The union deal is expected to help Chrysler in negotiations to form a partnership with Italian carmaker Fiat, which the Obama administration has advocated. Ford Motor Co, the third major US carmaker, has not asked for government loans.
