Obama Making Big Political Bet on GM

The Voluntary Employee Beneficiary Association, a retiree health care trust fund administered by the United Auto Workers, would hold 17.5% of the new company. The remaining 10% would go to "the old GM," and be distributed to the bondholders. The Treasury's 72.5% share would at some point be converted to equity.

The Treasury, which already has lent GM $19.4 billion, would provide $30 billion more in financing required to keep the company operating during the court process. The Canadian government is expected to provide an additional $9 billion.

The Ad Hoc Committee of GM Bondholders, which represents holders of about 20% of the $27 billion in unsecured GM debt, said it supports the revised offer because it provides them "the opportunity to recover a greater portion of their original investment than was previously offered.

"While the committee continues to remain troubled by preferential treatment that the UAW VEBA is receiving compared to the bondholder class -- rejecting this offer in the expectation that the bondholders will do better in a litigated outcome was a risk the Committee is unwilling to take," the group said in a prepared statement.

Bondholders have until 5 p.m. Saturday to formally agree to the deal, with a Chapter 11 bankruptcy filing expected on Monday, June 1. The case is expected to take 60 to 90 days to resolve.

About 15% of bondholders agreed to the previous proposal, said an administration official, according to The Associated Press. Approval by the bondholders committee and other large debtholders has brought the total to 35%.