General Motors Corp won a cost-cutting deal from its Canadian labor union on Friday, part of a package of concessions the automaker is expected to take into a federal bankruptcy court by the end of this month in a showdown with its bondholders.

GM's tentative agreement with the Canadian Auto Workers union comes a day after the embattled automaker won parallel concessions from its major union, the United Auto Workers.

The union deals come as GM nears a resolution in the long-running saga of the sale of its Opel unit.

In Europe, Magna International Inc has emerged as a favorite of German officials to acquire Opel, which has received bids from Italy's Fiat SpA and Belgian listed-private equity investor RHJ International SA.

Deals to cut costs at GM's North American factories and divest its unwanted brands would help clear the way for the automaker to enter bankruptcy protection with the backing of the Obama administration if an attempt to win over bondholders failed.

GM has kept operating since the start of the year with the help of more than $15 billion in emergency federal loans and has said it would need billions of dollars in additional financing if it filed for bankruptcy as expected.

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

GM bondholders, which hold about $27 billion of the company's debt, have balked at the terms they have been offered, which would give them a 10 percent stake in a restructured company.

A spokesman for a committee representing GM bondholders said institutional investors solidly oppose the offer.

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.

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

Creditors and auto dealers 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.

The GM and Chrysler plans to quickly trim about 2,400 U.S. dealerships from their networks through their restructurings also have drawn criticism from some U.S. senators, who want dealers to have more time to make transitions.

STEAM-ROLLING THE CREDITORS?

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.

But the U.S. government's strong direction of the Chrysler bankruptcy has moved the carmaker much faster toward a sale of its main business to Italy's Fiat than skeptics had expected.

That transaction now appears on track for completion by the end of the month, a stunning achievement given the complexity of the Chrysler bankruptcy.

There is a clear path to the sale going through. And the court is really trying to help that along, said Carren Shulman, a partner in the bankruptcy practice at law firm Sheppard Mullin.

Under its deal with GM, the UAW agreed to change the payment terms on some $20 billion it is owed for a trust that would pay for retiree healthcare. In exchange, GM offered the union a 39 percent stake in a reorganized company.

Four Republican lawmakers complained to Treasury Secretary Timothy Geithner that the restructuring of GM subverts the rights of bondholders, according to a letter from the lawmakers obtained by Reuters on Friday.

The restructuring favors the claims of the United Auto Workers over the rights and claims of the company's diverse group of bondholders, who collectively hold $7 billion more in General Motors debt than the UAW's health trust and are equal members of the creditor class, the lawmakers 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 Obama administration's 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.

GM shares -- which the automaker has warned could be worthless in bankruptcy -- were down 43 cents or 22.4 percent at $1.49 on Friday afternoon on the New York Stock Exchange.

GM bonds have been trading for pennies on the dollar for months in another sign that creditors, GM and the task force are unlikely to bridge their impasse. GM's 8.375 percent notes due in 2003 traded little changed at about 5 cents on the dollar.

(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)

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