As expected, General Motors has announced plans to discontinue Pontiac. But the automaker's news came with two other industry jolts. Forty of the dealer network will also be slashed and GM will cut 23,000 jobs by 2011.

The changes are the latest attempt to keep GM out of bankruptcy. But the CEO Fritz Henderson said bankruptcy is still imminent unless bondholders agree to an accompanying exchange of stock and money.

The new restructuring proposal will leave the Treasury Department, and thus U.S. taxpayers, owning a significant stake in GM. Treasury would accept GM stock, rather than cash, for repayment of about $10 billion that the government has already lent to GM.

Trust funds controlled by the United Auto Workers union would also hold a significant stake in the company. Between them, Treasury and the unions would own 89 percent of GM.

General Motors also announced an offer to its bondholders to swap $24 billion of the company's $27 billion in unsecured debt for stock. The comapany is offering bondholders 225 shares of its stock for every $1,000 it owes the bondholders in principal.

"It's
not impossible but it's a tough task," Henderson said about the company's ability to get enough bondholders to accept the company's stock. "That's why I think [bankruptcy] is more probable."

The company had announced many of the job cuts in February, but Monday's news that GM would have about 38,000 hourly U.S. employees by 2011 represents an additional reduction of 7,000 to 8,000 jobs beyond what GM previously disclosed.

The job cuts come as GM is set to announce the closing of more plants in the next few weeks.

The company said its goal is to cut costs to the level where GM can break even even with industrywide U.S. sales of only 10 million vehicles, rather than the 11.5 million to 12 million sales range that had been its previous break-even target.

General Motors also confirm last week rumor that the Pontiac brand will be dropped and that it wil reduce it dealers by 42 percent to 3,605 nationwide by 2010.

Since its debut in 1926, the Pontiac brand has included the GTO, Bonneville, Grand-AM, Firebird and numerous other offering including current models Vibe and G8

The Obama administration has given GM only until the end of May to reach deals with creditors and unions to cut costs or be forced into bankruptcy. But the Treasury Department extended GM an additional $2 billion in loans last week, bringing its total federal assistance to $15.4 billion.