Members of the Canadian Auto Workers union approved wage reductions and other concessions Monday, but GM's unsecured bondholders have resisted an offer to take a 10 percent stake in the company to wipe out $27 billion in debt. Analysts say it's unlikely enough bondholders will approve the offer, meaning GM would still be forced into bankruptcy protection by Monday.
Plant-level union officials met in Detroit on Tuesday to hear details of the agreement that GM, the UAW and the government reached last week. Several local presidents said after the briefing that they voted unanimously to recommend that members approve the concessions.
Local union leaders said the 14 factories that GM intends to close were not identified in the agreement or by UAW international officials. Those are part of GM's restructuring plan to be submitted to the government by a Monday deadline, said one of the officials, who spoke on condition of anonymity because the details of the meeting have not been presented to union members.
The company did commit to reopening three closed assembly plants and one stamping factory if demand warrants, according to the summary sheet. The factories were not identified.
Mike Green, president of a UAW local at a Cadillac factory in Lansing, Mich., said the leaders know it's better to have an agreement in place in case GM is forced into bankruptcy. Union members will vote on the concessions Wednesday and Thursday. "If you don't ratify it, you go into bankruptcy court with nothing," Green said. "If you go in with this, at least you have an agreement here. It's a good-faith agreement."
Green said it shows the union is working to help save GM. "It's too bad everybody didn't, and that's talking about the bondholders," he said.
GM's bondholders have argued that the offer they've received gives them too small a stake for the amount they are owed. GM wouldn't comment on whether it would file for bankruptcy shortly, but White House spokesman Robert Gibbs said it would go until the deadline.
"We've got about a week to go. Obviously, a lot of the stakeholders are making sacrifices and I think this is a process that will continue, as it did in the Chrysler situation, right up against the deadline," Gibbs said.
GM had previously discussed in filings with the U.S. Securities and Exchange Commission that it was negotiating for a capital structure that included the government taking 50 percent of GM's shares in exchange for wiping out half of GM's debt as of June 1. Currently the company owes the government $19.4 billion.
The union trust was to get 39 percent, with 10 percent going to the bondholders and 1 percent to existing shareholders. Upon approval of the exchange, GM would issue 62 billion new shares, then do a 1-for-100 reverse stock split.
But under the UAW agreement, the union trust would get 17.5 percent of the shares, plus a warrant for another 2.5 percent in exchange for wiping out $10 billion of the $20 billion the company owes to the trust. Other trust funds that have been in place for several years already are worth the remaining $10 billion, the settlement summary said.
That would leave 19 percent of the company's shares unaccounted for, and it was unclear whether those would go to the government or perhaps to sweeten the offer for bondholders.
GM has said it could extend the deadline for the bond exchange and will decide on Wednesday. Previously the company has said the government was preventing it from offering bondholders more than 10 percent of the restructured company.
The Associated Press obtained a summary of GM's agreement with the UAW, which also says most of GM's 61,000 hourly workers will get another buyout and early retirement offer, this one sweeter than the most recent one.
Production workers will be offered $20,000 plus a $25,000 car voucher for early retirement, while skilled trades workers will get $45,000 plus the car voucher.
Buyout packages include $115,000 and the car voucher for employees with 20 or more years of service. Those with less than 10 years would get $45,000 and the car voucher to leave the company.
The summary also says GM will take back five facilities from Delphi Corp., its former parts arm now in Chapter 11 bankruptcy protection.
GM will take ownership of Delphi Saginaw Steering in Saginaw, Mich.; Delphi Thermal Systems in Lockport, N.Y.; Delphi Powertrain in Rochester, N.Y.; Delphi Powertrain Systems facilities in Rochester, N.Y., and Grand Rapids, Mich.; and Delphi Electronics and Safety in Kokomo, Ind.
Officials from UAW locals that represent Ford Motor Co. workers also attended Tuesday's 2½-hour GM meeting to find out details of the concessions.
Ford already has reached a deal with the union to cut labor costs, but GM's agreement has far steeper cuts. Ford officials have said they will seek further changes so that its deal with the union is similar to GM's agreement.
General Motors has been trying to overhaul its business so it can keep receiving federal money to stay afloat as it deals with soaring costs and slumping sales. On Friday, the Detroit automaker borrowed $4 billion more from the federal government on top of the $15.4 billion it has already received.
GM plans to announce the closing of 14 more factories as part of its previously announced effort to shutter 16 plants to trim production and cut costs. The moves will lay off 21,000 workers.
Two of the 16 closures have been announced previously: an engine plant in Massena, N.Y., and a parts stamping plant near Grand Rapids, Mich.
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AP Auto Writer Kimberly S. Johnson in Detroit and Associated Press Writer Ken Thomas in Washington contributed to this report.
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