The UAW says it reached a tentative new contract with General Motors and the U.S. Treasury Department, including a reworking of $20 billion in debt owed to a UAW-administered Voluntary Employee Beneficiary Association, the union said in a statement today.
Terms were not released, pending a ratification vote by rank-and-file union members. GM declined to comment.
The accord comes as GM faces a June 1 deadline to prove its viability to the federal government and a probable Chapter 11 bankruptcy filing. Along with the labor concessions, GM and Treasury also are asking GM bondholders to forgive about 90% of that unsecured debt.
The automaker has offered bondholders with $27 billion in GM debt a 10% stake in the reorganized company. Bondholders have until the end of the day May 26 to accept that offer.
The embattled automaker has indicated that it would likely file for bankruptcy unless about $24 billion in that bond debt or 90% of the total is extinguished in the debt exchange.
GM has offered Treasury a majority stake in a restructured company. The UAW would get 39%, while existing shareholders would be left with a 1% ownership stake.
Treasury has kept GM operating with about $15.4 billion in bailout loans.
David Barkholz is a reporter at Automotive News, a sister publication of Pensions & Investments.