GM Generali

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General Motors Corp. (GM) bondholders are insisting they recoup at least half the debt owed to them by the U.S. automaker, substantially more than called for under loan terms set by the U.S. government.

GM is negotiating with bondholders and its labor unions to shave billions in debt as part of a recovery plan the company must deliver to the U.S. Treasury by Feb. 17.

The viability plan is a key requirement for the $13.4 billion in federal loans secured by GM.

A person familiar with the committee representing bond holders on Thursday said the group is seeking parity with the United Auto Workers.

Under the loan terms, the union is asked to forgo half of the more than $20 billion that GM owes to a union-run retiree health fund in exchange for equity. The plan calls on GM to reduce its overall debt by two-thirds.

Chrysler LLC faces similar demands. The two auto makers are surviving on $17.4 billion in federal loans granted late last year to save the companies from seeking bankruptcy protection.

Lenders have already started talks with Chrysler about a debt-for-equity swap, and aim to start the process by the Tuesday government deadline, people familiar with the talks said Wednesday.

The auto maker is seeking a further $3 billion in U.S. government loans and must win concessions from creditors, employee groups and other stockholders to prove its long-term viability.

GM bondholders last week received an early version of the restructuring plan GM intends to present Tuesday, the person said, describing the plan as "a very comprehensive" attempt to address competitive shortcoming between GM and foreign-based rivals.

As of Thursday, the new U.S. administration had yet to appoint a so-called auto czar, who is meant to receive the automakers' viability plans.

The lack of a figurehead has complicated negotiations amid a wider lack of clarity about what the Treasury is seeking.

President Barack Obama said whether the auto makers get additional helps depends largely on the plans they present Tuesday, Reuters reported Thursday.

"My goal, consistently has been to offer serious help once a plan is in place that ensures long-term viability and that we're not just kicking the can down the road," Obama was quoted by Reuters as saying. "What the nature of what that help ends up looking like, I think is going to depend on the plan."

-By Sharon Terlep, Dow Jones Newswires; 248-204-5532; sharon.terlep@dowjones.com