A group of major General Motors Corp bondholders on Thursday gave its support for a revised bond exchange, saying the option of litigation in bankruptcy court was too risky.

The Ad Hoc Committee of GM bondholders supports the revised offer from GM and believes that when contrasted with the alternative -- uncertain and costly bankruptcy court litigation -- that it represents the best alternative for bondholders in the current difficult and dire situation, the committee said in a statement.

Since the first offer was made on April 27 for bondholders of $27 billion of debt to accept a 10 percent equity stake for those claims, circumstances have materially changed that make today's offer more attractive, the statement said.

The committee of about a dozen of the biggest GM bondholders said it continues to remain troubled by preferential treatment that the United Auto Workers union received versus other bondholder classes.

However, rejecting this offer in the expectation that the bondholders will do better in a litigated outcome was a risk the Committee is unwilling to take, the statement said.

The U.S. Treasury Department has said that it will advance substantial additional funds to GM and convert approximately $40 billion of this into common equity in the new GM, the statement said.

The Treasury Department also is converting about $30 billion of additional debt into equity.

Given these factors, the allocation of 10 percent of common equity in the new GM, plus the opportunity to participate in the upside of the company through warrants to purchase 15 percent of the fully diluted equity in the new GM, gives the bondholders the opportunity to recover a greater portion of their original investment than was previously offered, the statement said.

(Reporting by Walden Siew; Editing by James Dalgleish)

General motors