THE EVENT: General Motors Corp. (GM) stepped up its restructuring plan Monday, saying it will cut thousands more hourly jobs and eliminate its Pontiac brand by the end of next year. It will also start an exchange offer for $27 billion of its unsecured public notes. GM's current market capitalization of $1.28 billion implies holders of the company's $27 billion in bonds would get approximately half-a-cent on the dollar - well below the already distressed levels at which the debt trades. Even under optimistic scenarios, the equity would be worth only 8 to 10 cents on the dollar. But bondholders' other options could be just as bad. S&P said it would consider the debt exchange tantamount to default under its criteria. Shareholders would be wiped out.

Under the plan, the U.S. government would be the majority owner in the auto maker in return for an extra $11.6 billion in federal aid. But GM's chief financial officer said the Obama administration has shown no signs it wants to run the day-to-day operations of the auto maker.

The exchange will commence only if 90% of bondholders agree to the terms. If GM fails to get adequate participation in the bond proposal, it will file for bankruptcy protection.

GM's CFO said it may press a bankruptcy court to approve the same debt exchange terms.

The company also said it will cut U.S. dealer count by more than 40% by the end of next year. The company said it will focus on four core brands in the U.S. - Chevrolet, Cadillac, Buick and GMC - as it looks to make fewer different models and focus on product development.

WHAT IT MEANS: GM, which is surviving on federal loans, is racing to restructure by June 1 under close watch of the Obama administration. The bond-exchange filing represents an important step in GM's effort to restructure its company, President Barack Obama's automotive task force said in a statement. But GM Chief Executive Officer Fritz Henderson said sufficient acceptance of the debt-swap offer is far from certain and a Chapter 11 filing is now "more likely."

MARKETS: GM shares jumped on the news, closing up 21% at $2.04. GM credit default swaps are falling. It costs investors $7.9 million upfront, plus a $500,000 annual fee, to protect $10 million of GM senior bonds for one year, according to Phoenix Partners. That's against $8.4 million upfront before the news.

In after hours trading, GM shares moved up slightly, to $2.05.

Following are key stories:

.-UPDATE: CREDIT MARKETS: Investors Parse Latest GM Survival Plan

.-GM Under Review/Neg: DBRS

.-Fitch Could Revise GM Recovery Ratings Downward

.-UPDATE: GM To Cut 21,000 Hourly Jobs, Eliminate Pontiac Brand

.-=UPDATE: GM Launches Massively Dilutive Debt Exchange

.-White House: GM Bond Exchange An 'Important Step'

.-GM CFO: If Bond Exchange Fails, Same Terms May Be Used In Bankruptcy

.-GM Exec: Obama Admin Doesn't Want To Run Day-To-Day Operations

.-=WSJ:GM CEO: Co. Needs To Be Run Simpler, Leaner In Future

.-=GM Offer Hard On Bondholders, But Choice Still Tough

.-S&P Would Consider GM Distressed Debt Exchange Tantamount To Default Under S&P Criteria

.-GM Canada Work Force To Drop To 4,400 In 2014 From 10,300 In 2008

.-GM: Will Continue Talks With Possible Opel Investors In May

.-GM CEO: Co Will Outline Options For Its Dealers In May -CNBC

-New GM Viability Projects Slide In Market Share