UPDATE:GM Ad-Hoc Panel: Government Deal Gives 25% Stake Incl Warrants

The ad-hoc committee representing 20% of General Motors Corp.'s (GM) bondholders said the deal struck with the government and the auto maker gives them a 25% stake including the warrants in the new company.

Under the deal, the bondholders would get a 10% stake up front and warrants to buy a 15% stake - for a total of a 25% stake if and when the reorganized company's market capitalization reaches $30 billion - implying a return of 28 cents on the dollar for bondholders.

"This is specifically negotiated; 25%," said attorney Andrew Rosenberg of Paul, Weiss, Rifkind, Wharton & Garrison LLP, who is representing the committee.

Rosenberg's comments come as GM, which is surviving on federal loans, races to get a restructuring plan in place by June 1, under the close watch of the Obama administration.

It is widely expected the auto maker will follow rival Chrysler LLC into bankruptcy protection Monday under a plan that would give the U.S. government a 72.5% stake. The U.S. will boost its support for GM by as much as $50 billion and keep it closely held for up to 18 months.

Gaining the support of unsecured bondholders, who hold $27 billion in the auto maker's debt is crucial to ensuring that the reorganization in bankruptcy will not drag out for too long. As it stands, the offer amounts to just under 28 cents on the dollar for the unsecured bondholders, assuming the warrants come into the money.

Earlier Friday, members of the United Auto Workers union overwhelmingly voted in favor of the union's new deal with GM, clearing another major hurdle for the ailing auto giant.

Secured bank lenders, meanwhile, are expected to get full recovery on their $6 billion in loans to the auto maker under the bankruptcy plan.

Rosenberg also said that the deal protects unsecured bondholders' claims against other unsecured claims in the bankruptcy process. He said that if other claims come in between $7 billion and $14 billion, the government will give up some of its equity stake to maintain the bondholders final equity position. He said the addition would come in the form of more equity up front instead of warrants, and added that the government contemplates claims of substantially less than $7 billion.

The committee's representatives have spent the day attempting to convince other stakeholders that this deal is economically attractive. Rosenberg said the committee held an open conference call for bondholders earlier Friday, and since then support for the deal - due by 5:00 pm EDT Saturday, per the Task Force offer - is pouring in.

"We can't keep up," Rosenberg said.

-By Andrew Edwards, Dow Jones Newswires; 201-938-5973; [e-mail]

(John Stoll, Jay Miller and Sharon Terlep contributed to this report.)