GM Board Meeting Later This Week After Failed Debt Exchange

General Motors Corp.'s (GM) board of directors will meet later this week to decide the ailing auto maker's next move after bondholders dashed its best hope of avoiding a bankruptcy protection filing.

The company, possibly in its last days out of court, announced Wednesday that the number of bondholders willing to exchange their debt for stock was far below the 90% threshold GM needed to pull off a restructuring outside of Chapter 11 protection.

GM won't repurchase any of the $27.2 billion of notes it sought and will instead decide an alternative route as a Monday deadline nears, the company said in a statement. A GM spokeswoman said she is unaware of any plans to extend of revise the offer in an effort to win over more bond holders. GM had sought to wipe out 90% of its $27 billion obligation in exchange a 10% stake in a restructured company, an offer that would have left bondholders with cents on the dollar of what they're owed.

Bondholders, including tens of thousands of individuals and institutions, rejected the offer as unfair relative to what the company was offering other stakeholders, including the union and the U.S. government.

Small and large bondholders waged an aggressive campaign to try and get the U.S. Treasury - which dictated terms of the debt swap - to budge.

Bondholders thought a new labor deal GM struck last week with the United Auto Workers was a signal the company may sweeten its deal because it gave the union less equity than initially proposed. The deal could leave the U.S. owning as much as 70% of a restructured GM.

But, as of Wednesday, the company didn't plan a new offer.

Meantime, around 60,000 UAW-represented GM workers are voting on the labor deal Wednesday and Thursday after local union leaders from around the country voted to approve the concessions on Tuesday. GM, surviving on government loans, could file for bankruptcy protection before a government-imposed Monday deadline to reorganize itself into a viable company. GM hopes to rush through bankruptcy court in as few as 30 days, but the drive for an expedited bankruptcy could be challenged by GM's investors and dealers.

GM and the United Auto Workers have agreed to a new restructuring plan that slashes labor costs and relieves GM of billion in obligations to retirees. The government's plan also calls for paying off in full GM's secured lenders, including banks such as Citigroup Inc. and J.P. Morgan Chase & Co., which are owed about $6 billion. That would remove one potential obstacle to a speedy bankruptcy reorganization.

-By Sharon Terlep, Dow Jones Newswires; 248-204-5532; [e-mail]

John Kell contributed to this report.