What seems to be the most important week in General Motor’s history is off to a good start. Canadian Auto Workers (CAW) voted 86 percent in favor of a new cost-cutting deal with GM that would assure the company’s feature in Canada. However, in the next five days, GM needs to ratify its terms with the UAW and have a major showdown with bondholders to avoid one of the largest corporate bankruptcy filings ever.
As most of us took the day off to celebrate Memorial Day yesterday, a source familiar with the matter said that the U.S. Treasury was preparing to loan GM $30 billion in debtor-in-possession financing and exit financing. The loan would bring GM’s total federal financing to $50 billion. The struggling automaker received another $4 billion on Friday.
Today, UAW national leaders will meet to discuss a new round of concessions that include closing plants, cutting pay and cutting health car trust. UAW workers are expected to start voting immediately.
The source said that GM is not going to seek bankruptcy protection until its June 1 deadline. Bondholders have until 11:59 p.m. on May 31 to swap $27.2 billion in debt for a 10 percent stake in a restructured GM.
– By: Omar Rana
Source: MSNBC, Detroit News