London: American auto maker General Motors (GM) is in emergency talks with its lenders over a multi-billion dollar debt-for-equity deal which could save the company from filing for bankruptcy, a media report said.

“GM is in emergency discussions with its lenders this weekend over a multi-billion dollar debt-for-equity deal that could save the iconic American car giant from a Chapter 11 bankruptcy filing,” The Sunday Times said.

The report said that the auto maker’s chief executive Rick Wagoner is scrambling to secure a deal by Tuesday, when he will make a fresh attempt to secure up to $12 billion (£7.8 billion) in financial aid from the US government.

According to the publication, Wagoner is trying to persuade some of the debt-holders to swap part of General Motors’ $43-billion debt pile for shares, in a move that would shore up the balance sheet and reduce its crippling interest costs.

The auto maker has been paying nearly $2.9 billion a year in interest payments. Further, the company has lost about $13 billion in the first nine months of this year due to weak demand and restructuring costs.

The report noted that the new capital structure would form the basis of a new business plan for a much smaller, leaner business. If agreement can be reached this weekend the company could avoid seeking bankruptcy protection.

American auto giants — General Motors, Chrysler and Ford — have been severely hit by the ongoing financial turmoil and have been seeking assistance from the US government to shore up their fortunes.