GM details its restructuring plan

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General Motors has outlined proposals to pay off its debts by issuing new shares that would effectively wipe out the holdings of its existing investors.

"There will be very substantial dilution to existing holders of GM common stock," GM said in a Securities and Exchange Commission (SEC) filing.

The plans are subject to discussions with the US Treasury department.

There would be a reverse share split, under which 100 of the old shares would be exchanged for one new share.

Existing shareholders would end up with about 1% of the new shares.

The plans would leave the Treasury holding 50% of GM's shares.

GM has a 1 June deadline to restructure its business so that it can prevent it going bankrupt.

It needs to issue the shares to fund government loans and to pay the healthcare costs of its retired workers.

Job losses

As part of the restructuring it plans to cut 21,000 US jobs this year and phase out its Pontiac brand.

It also hopes to halve its debts by persuading bondholders to swap $27bn (£19bn) of bonds for shares.

GM is also in the process of selling off its European brands.

Fiat, which has been in talks about buying the assets of Vauxhall and Opel, has denied reports that it would close plants and cut thousands of jobs.

GM's third European brand, Saab, is also for sale, but Fiat is not thought to be among the bidders.

The German daily Frankfurter Allgemeine Zeitung said it had seen internal documents that showed Fiat planned to cut 18,000 jobs and close or scale down 10 factories, but Fiat has denied this.