updated 5/5/2009 5:54:03 PM ET 2009-05-05T21:54:03

General Motors Corp. said Tuesday it is planning a reverse stock split that would give shareholders one share of new stock for every 100 shares they currently own.

The automaker said in a filing with the Securities and Exchange Commission that the deal would be part of an agreement with the Treasury Department in which the government would assume at least half of GM’s debt in exchange for company shares.

The filing said both sides are still negotiating the terms of the debt swap.

Under GM’s plan, the U.S. government would get a 50 percent equity stake in exchange for about $10 billion in loan forgiveness. The UAW, for its part, would get a 39 percent stake in exchange for $10 billion in payments to its health care trust in stock. GM would issue up to 60 billion shares as a result of the bond exchange, Treasury loan and VEBA agreement.

In a separate filing, GM said its Canadian subsidiary will receive a $2.6 billion loan ($3 billion Canadian) from the Canadian government. GM can draw on the loan in installments of $500 million Canadian ($425.5 million). The Canadian government would be among those first in line to receive repayment of 35 percent of the loan, according to the filing.

The Canadian Auto Workers union has approved modifications to its existing contract in an effort to help GM cut labor costs. GM Chief Executive Officer Fritz Henderson said the company would go back to the union, asking for deeper cuts to match those recently approved by Chrysler’s CAW workers.

GM has received $15.4 billion in U.S. government loans and faces a June 1 deadline to restructure or be forced into Chapter 11 bankruptcy protection.

Shares of GM rose 4 cents Tuesday to close at $1.85.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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