General Motors Corp on Friday borrowed another $4 billion from the U.S. Treasury and won a cost-cutting deal from Canadian auto workers as a showdown with bondholders set the stage for a bankruptcy filing by the end of the month.

The latest emergency funds extended by the Obama administration take the total government funding to keep GM afloat since the start of the year to $19.4 billion.

GM said it expected that total to rise to $27 billion after June 1, a government-imposed deadline for the embattled automaker to achieve a sweeping restructuring analysts say will require bankruptcy to complete.

The tentative agreement with the Canadian Auto Workers union, if ratified, would reduce hourly compensation costs by about 28 percent after including a round of concessions the union agreed to give in March.

A day earlier, GM won similar concessions from the United Auto Workers to reduce operating costs and pay the union in stock instead of cash to fund a retiree healthcare trust.

Along with plans to drop dealers and unprofitable brands like Hummer, Saturn, Pontiac, Saab and Opel, the pair of labor deals would help clear the way for GM to enter bankruptcy protection with the backing of the Obama administration.

All of our discussions that we had, it's very likely that they will go into Chapter 11, CAW President Ken Lewenza said at a Toronto news conference to announce the union's tentative contract agreement with GM.

In Europe, GM also appeared to be nearing a resolution of its long-running effort to find a buyer for its Opel unit.

Magna International emerged as the favorite to acquire Opel after top German officials said the Canadian car parts group had submitted a better plan than rival bidders Fiat and Belgian-listed private equity investor RHJ International.

BONDHOLDERS NEXT IN LINE

GM faces a June 1 deadline to restructure its debt and operations and has said it could file for bankruptcy if it fails to get bondholders to agree to forgive some $24 billion -- or 90 percent -- of the amount they are owed.

Under Obama administration orders, GM has offered bondholders a 10 percent stake in a restructured company.

A spokesman for a committee representing GM bondholders said institutional investors solidly oppose that offer as insufficient.

It's been a universal no from the get-go, said Nevin Reilly, a committee spokesman. Bondholders are being seen as speculative bad guys; but bondholders are investors, many of whom put their retirement money into GM.

Creditors have complained their rights have been ignored in the restructuring of both GM and its smaller rival Chrysler, which has been operating in bankruptcy since April 30.

GM and Chrysler plan to drop about 2,400 U.S. dealerships, a move criticized by some U.S. lawmakers.

Critics argue that the Obama administration has favored the position of unionized auto workers and has run roughshod over claims from other creditors in the process.

Four Republican lawmakers sent a letter of protest to Treasury Secretary Timothy Geithner on Friday saying that the Obama administration was undermining GM bondholders in order to favor the UAW, a political ally.

We are extremely concerned that in the name of restructuring General Motors, the presidential task force on the auto industry has begun waging what some believe amounts to a war on capital, the letter said.

Bondholders must have a seat at the table during negotiations in how the company would be restructured, said the letter to Geithner from Representatives Jeb Hensarling, Eric Cantor, Mike Pence and Pete Sessions.

Austan Goolsbee, a member of the White House Council of Economic Advisers and the autos task force, said GM bondholders need to recognize that they must sacrifice.

Goolsbee said he expects GM's restructuring efforts to run right up to the June 1 deadline but not beyond. Usually these things, and as you saw with Chrysler, go right up to the deadline, he said.

The CAW's Lewenza said the Canadian union had been told that it needed to reach a new contract deal with GM urgently so that Obama could review the terms of GM's business plan.

Lewenza said he was told that Obama would need to see the GM business plan, which will include details of how many jobs it will cut, by the weekend.

The Obama administration steered Chrysler into bankruptcy on April 30 with an aim to push it through the court process within 60 days. That bankruptcy has been watched as a kind of dry run for the more complex reorganization expected from GM and has moved quickly so far.

The Chrysler plan is to sell substantially all of its assets to a new company owned by Fiat, a UAW healthcare trust, and the U.S. and Canadian governments.

Fiat, Chrysler and the automaker's creditors filed court papers on Friday in support the planned sale and urged a federal judge to reject an appeal by a group of Indiana pension funds that have sought to have the transaction postponed.

Fiat said in court papers that it was concerned about the deteriorating value of Chrysler's assets and said a delay could ultimately prove fatal to its plans.

GM shares -- which the automaker has warned could be worthless in bankruptcy -- closed down 25 percent on Friday.

GM bonds have been trading for pennies on the dollar for months in a sign of expected default. GM's 8.375 percent notes due in 2003 traded on Friday at about 5 cents on the dollar.

(Reporting by Kevin Krolicki and David Bailey; Additional reporting by John McCrank in Toronto; Kevin Drawbaugh, John Crawley and Jeremy Pelofsky in Washington; Walden Siew, Tom Hals and Caroline Humer in New York; Noah Barkin and Christiaan Hetzner in Germany; Editing by Gerald E. McCormick and Patrick Fitzgibbons, Gary Hill)

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