General Motors will cut 21,000 US factory jobs by next year, phase out its Pontiac brand, and ask the government to take company stock in exchange for half of GM's government debt as part of a major restructuring effort needed to get more government aid, the firm said today. GM will also offer 225 shares of common stock for every $1,000 in notes held by bondholders as part of a debt-for-equity swap.
The bond exchange aims to wipe away a large majority of the company's $27 billion in unsecured debt. GM is also offering the United Auto Workers stock for at least 50% of the $20 billion the firm must pay into a union-run trust that will take over retiree health-care expenses starting next year. All the stock offerings mean that current common stockholders would own only 1% of the company under the deals.