The Obama administration has directed the near-bankrupt General Motors Corp to prepare a new restructuring plan that would pay off bondholders and members of the automaker's major union in stock in exchange for $48 billion in debt, according to several reports.

The US treasury, which has provided $13.4 billion in emergency funding to keep GM operating since the start of the year, has indicated that it could also convert those taxpayer-backed loans into GM stock, the reports said.

GM, which is working to complete a restructuring that could include a bankruptcy filing, plans to make the new proposals to bondholders and the United Auto Workers union by April 27 to exchange their $27.5 billion in claims for equity.

GM, facing a 1 June deadline for a government-backed bankruptcy, was told this week by President Barack Obama's auto task force to try to restructure its debt out of court. However, there was no official confirmation of the developments of the confidential nature of the talks between GM and President Barack Obama's autos task force, which is charged with revamping the US auto industry.

The Detroit-based automaker is planning to announce the offer within 11 days, because the US Securities and Exchange Commission requires that investors must have a month to decide whether to participate, according to one report. Bondholders also may be offered accrued interest in cash.

The proposals emerged after two weeks of intense talks between the government's auto task force, headed by former investment banker Steve Rattner and GM executives in Detroit. The stock-based payout to GM's major union and its bondholders would represent much deeper concessions for both groups than the terms they had been offered under the GM bailout loans approved by the Bush administration.

Under the terms of its former restructuring plan, GM had aimed to cut its roughly $28 billion of bond debt by two-thirds and convert half of the remaining $20 billion it owes to its retiree health care fund in equity, rather than cash. But the task force rejected that plan, saying GM needed to cut more debt from its balance sheet in order to be a profitable company.

It was not clear what specific terms the UAW would be offered, but people briefed on the plan said the union's higher payout relative to bondholders would be maintained. An equity-based debt exchange would make the union, the US government and GM's existing bondholders all major stockholders in the recapitalised automaker.

GM Chief Executive Fritz Henderson, who assumed the top job in late March when the Obama administration ousted his predecessor, Rick Wagoner, told reporters on Friday that GM management had spent the past two weeks working with US officials on a revised business plan.

That plan, which will include more job cuts and plant closures, will be shared with bondholders and the union as talks on the planned debt restructuring intensify in coming weeks, he said.

Henderson said it was still feasible for GM to avoid bankruptcy, but said the automaker was also working on detailed plans for a filing if it is forced to take that route.

The talks between GM and the UAW and between the automaker and its bondholders have been largely stalled since February. Those negotiations have played out in parallel because both groups are negotiating an unsecured claim under the threat of bankruptcy.

The UAW, which has made a series of concessions to GM since 2005, has defended its proposed higher payout ratio of 50 per cent versus roughly 33 per cent for bondholders as justified by its prior actions. The union agreed to create a trust - known as a voluntary employee beneficiary association - as the centerpiece of a ground-breaking 2007 contract intended to slash GM's costs.

'GM needs $5 billion more soon'
Henderson also said GM would need $5 billion in additional government aid "soon." Henderson, who took the helm at GM as the US government forced a shake-up as part of a bailout deal, has been given 60 days by the White House to come up with a strengthened viability plan or face a likely bankruptcy. 

President Barack Obama has pledged to provide GM and bailed-out rival Chrysler with "working capital" to come up with new business plans to weather the crisis that has hammered the auto sector. The two automakers are now seeking an additional $21.6 billion in government aid.

Henderson said it was too soon to say if the auto giant would be able to avert bankruptcy, but repeated his preference for an out-of-court restructuring. He said the new GM plan would mean "further reduction in facilities," adding that "plant closings will have to go further than the February plan" rejected by the auto panel. 

He that reports suggesting GM would shed its GMC brand of pickups and four-wheel drive vehicles was "speculation" and that this remained one of the auto maker's "core" product line, with brands including Chevrolet, Buick and Cadillac.