WASHINGTON – The United States and Canada would own nearly three-quarters of a restructured General Motors, effectively nationalizing the border-straddling industrial colossus as part of an overhaul plan that would put most of the rest of the company in the hands of a union trust fund.
Sources said the plan, a bankruptcy reorganization proposal being drafted by the Obama administration, would require the U.S. government to lend GM about $30 billion on top of the $19.4 billion it has already invested, giving it the majority stake in the company.
Canada is preparing to lend about $9 billion for a smaller interest, according to the sources, who are familiar with the plan.
These figures would total nearly $60 billion, making the GM bailout one of the largest corporate rescues since the current economic crisis began last year and one of the largest reorganizations in history.
The sources cautioned that the negotiations are continuing and that the totals could change.
GM moved closer to bankruptcy on two fronts Tuesday. The automaker’s bondholders rejected a company request to forgo much of what they are owed in exchange for a small amount of stock, making it likely that their differences will have to be settled in court.
Meanwhile, union leadership approved concessions aimed at protecting labor’s interest whether a filing is necessary or not.
The government is taking on the ownership role at GM reluctantly, officials have said, adding that it is not intended as a permanent situation.
Nonetheless, for the foreseeable future, the United States will have broad power over the company, including its ability to appoint board members.
In preparing GM for a trip to bankruptcy court, the U.S. government is following the path set by Chrysler.
Aside from the United States and Canada, which would control about 72 percent of GM, the union’s retiree health trust would hold a stake starting at 17.5 percent that could grow to 20 percent.
The existing bondholders could end up owning about 10 percent of the company.
One source said that the ownership breakdown was fluid and subject to continuing negotiations before GM’s expected bankruptcy filing on Monday.
Another person, who spoke on condition of anonymity because the discussions are private, said some of the paperwork could be submitted by the weekend.
As the corporate behemoth moved to the brink of bankruptcy Tuesday, there was a flurry of activity among its stakeholders, primarily its bondholders and its union, the United Auto Workers.
The bondholders had been given a deadline of 11:59 p.m. Tuesday night to agree to a company offer.
The bondholders are owed $27 billion. GM had asked that at least 90 percent of them agree to a deal under which they would drop their debt claims in exchange for a 10 percent stake in the company. But too many rejected the offer, sources said Tuesday.