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Old 05-21-2009, 12:04 PM   #1
Tran
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Post G.M. and Union Reach Deal on Contract Changes

JUST ANNOUNCED ON NYTIMES:

DETROIT — The United Automobile Workers union said Thursday that it had reached a tentative deal with General Motors and the Treasury Department that would help G.M. cut its labor costs and reduce its obligations to a new retiree health care fund by billions of dollars.

The U.A.W. did not release details of the deal, which must be ratified by G.M. workers. The agreement is expected to be similar to one reached last month with Chrysler, which allowed that automaker to substitute equity for up to half of the $10 billion owed to its retiree health care fund. G.M. owes about twice that amount to the fund for its workers.

The deal is one of the government’s requirements for G.M. to win more loans but not enough in itself to keep the carmaker from having to file for bankruptcy protection on June 1, the government’s deadline. More important, G.M. needs to persuade nearly all of the bondholders who hold more than $27 billion of its debt to swap their claims for stock in the restructured company. Most analysts expect the offer to fail.

Two days ago, G.M. said in a filing with the Securities and Exchange Commission that it did not expect to reach an agreement with the U.A.W. before May 26, the deadline for bondholders to decide on the exchange offer.

But the U.A.W.’s president, Ron Gettelfinger, and G.M.’s chief executive, Fritz Henderson, have been involved in intense talks with Treasury officials in Washington since Monday.

G.M. has said it wants to give the U.A.W. nearly 39 percent of the company, while bondholders would receive a 10 percent stake and existing shareholders would account for 1 percent. The Treasury, which has loaned $15.4 billion to G.M. since December, would forgive half of that debt and receive a majority interest in G.M.

Earlier this month, Mr. Gettelfinger said he expected the union to reach an agreement with G.M. that contained nearly identical terms as the one with Chrysler. “I cannot believe that Treasury would mediate something better at G.M. to put Chrysler at a disadvantage,” he said on May 4. “The collective bargaining piece of it should pretty much be a template.”

Yet on Tuesday, he was quoted by reporters in Washington as saying that the parties had “a long way to go” to reach a deal.

Only two major obstacles remain to avoid a bankruptcy filing before GM's government-imposed June 1 deadline. The first is getting CAW to follow the UAW's lead and sign a new agreement, and the second is to get the majority of GM bondholders to accept a debt-for-equity swap that would erase $27 billion of the automaker's debt but leave creditors with only a 10% stake in the company. The UAW would have its proposed 38% stake, common GM shareholders would hold a 1% stake and the U.S. government would have a majority stake of 51%. Its creditors, however, do not appear willing to accept GM's debt-for-equity offer as it stands, so unless a miracle happens in the next two weeks, a Chrysler-like Chapter 11 bankruptcy filing still appears the most likely result.
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Old 05-21-2009, 12:07 PM   #2
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Suhweeeet!
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Old 05-21-2009, 12:07 PM   #3
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so....this is good news?
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Old 05-21-2009, 12:08 PM   #4
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Its a step in the right direction. May not save GM from having to go through bankruptcy, but it helps they got this out of the way before hand. If by some miracle the bond holders decide not to be d-bags and agree to a settlement, GM may get lucky!
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Old 05-21-2009, 12:11 PM   #5
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The Treasury, which has loaned $15.4 billion to G.M. since December, would forgive half of that debt....
Not sure that is going to go down so well with the taxpayer.
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Old 05-21-2009, 12:11 PM   #6
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Good stuff.
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Old 05-21-2009, 12:12 PM   #7
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Not sure that is going to go down so well with the taxpayer.
yeah, didn't think about that. if they forgive half that debt, can i get my RS and sunroof for free?
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Old 05-21-2009, 12:14 PM   #8
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yeah, didn't think about that. if they forgive half that debt, can i get my RS and sunroof for free?
Hell - how about the whole car?
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Old 05-21-2009, 12:33 PM   #9
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i doubt the union workers will agree to the proposal to be honest...
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Old 05-21-2009, 12:34 PM   #10
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Not sure that is going to go down so well with the taxpayer.
Exactly. We are going to have to eat the Chrysler money and now half of GMs?? Ouch.
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Old 05-21-2009, 12:35 PM   #11
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They are still going to file for bankruptcy on June 1st. Then all bets are off. They will be just like idle Chrysler is now but on a far larger scale and much more debt.
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Old 05-21-2009, 12:41 PM   #12
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Its a step in the right direction. May not save GM from having to go through bankruptcy, but it helps they got this out of the way before hand. If by some miracle the bond holders decide not to be d-bags and agree to a settlement, GM may get lucky!
You really need to understand the situation before you call a group of people a d-bag. The Union is offered $.39 on the dollar for thier stake while the bondholders are offered only $.10 on the dollar for thier stake? I guess you'd take the $.10 offer?
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Old 05-21-2009, 12:45 PM   #13
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You really need to understand the situation before you call a group of people a d-bag. The Union is offered $.39 on the dollar for thier stake while the bondholders are offered only $.10 on the dollar for thier stake? I guess you'd take the $.10 offer?
What are they going to get once GM goes into bankruptcy? They are betting they will get more, but really They could get less. Or they could just settle with GM outside of bankruptcy (thereby helping GM avoid it all together) and it may help their future returns with the company.
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Old 05-21-2009, 12:48 PM   #14
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Well the workers are between a rock and hard place. If they dont accept terms now their chances of getting something better during CH. 11 will be worse. I think this will help either avoid ch. 11 or significantly speed it up. If you think about the employees is one of the big problems they face. The UAW needs to go or needs to be restructured they suck so much money out these car companies its rediculous.
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