Struggling US carmaker General Motors (GM) has announced further job cuts to its workforce with 21,000 US jobs to be axed.
GM, which is the world’s largest carmaker, has a deadline of 1 June to restructure the business in order to achieve a multi-billion dollar loan from the Government to avoid bankruptcy protection.
So far, GM has received $15.4 billion in Government loans, which GM wants to swap for a 50% stake. GM is also hoping to slash its debts by half by persuading bondholders to exchange $27 billion of bonds for shares.
Under the new plans, existing shareholders will hold just 1% of the revamped business.
In the meantime, GM has already announced plans to reduce headcount significantly since the global economic downturn has resulted in a slump in demand for big-ticket items, such as cars.
This has affected carmakers worldwide with many cutting back on production and slashing jobs. In particular, fellow US carmakers Chrysler and Ford have been hit by a severe fall in sales.
Meanwhile, GM said it is to focus on four brands in the US - Chevrolet, Cadillac, Buick and GMC and is to phase out the renowned Pontiac brand by Christmas.
It will also slash the number of its US dealerships by almost half to 3,605 by the end of next year, from 6,246 in 2008, while the plants will be reduced from 47 to 34.
Shares in GM rose 24% to $2.09 following the announcement.