General Motors Corp. won’t terminate its hourly pension plan, the United Auto Workers union told its members today — a move that could have cost retirees thousands of dollars in lost benefits.
But the union disclosed that both the Obama administration and GM, during the course of negotiations aimed at restructuring the company, had sought to terminate the company’s underfunded hourly pension plan.
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General Motors Corp. borrowed $4 billion in additional federal aid Friday, which is $1.4 billion more than originally requested, to avoid running out of money, the automaker said late today in a regulatory filing.
That brings GM’s total borrowing to $19.4 billion.
Until today, the automaker had received $15.4 billion, but last month signaled it would need $11.6 billion more to survive until the end of the year including $2.6 billion before June 1.
But the $2.6 billion payment was not enough to cover bills, GM said late today. It needed the $4 billion now and the balance of the $11.6 billion later this year.
“We appreciate President Obama’s and his administration’s ongoing support of GM and the domestic U.S. auto industry as we undertake the difficult but necessary actions to reinvent our company,” GM said in a prepared statement. “We will continue to work closely with members of the President’s Auto Task Force throughout our restructuring and together we will continue to monitor our liquidity needs during this period.”
GM faces a June 1 deadline to restructure the company and reach concessions with the United Auto Workers and bondholders or be forced into a Chapter 11 bankruptcy filing.
A battle over the future of troubled General Motors Corp.’s Opel unit is heating up as Germany prepares to decide which of three potential suitors it prefers to takeover the automaker.
Germany’s economy minister said in an interview published Sunday that all three bids have shortcomings and made clear that an Opel bankruptcy remains an option unless the bids are improved.
Meanwhile, with many German politicians preferring a bid from Canada’s Magna International Inc. and Russia’s Sberbank, the head of Italy’s Fiat SpA offered new assurances that his plan would not mean drastic job cuts in Germany.
That came after Economy Minister Karl-Theodor zu Guttenberg said Saturday that Fiat had made adjustments to its offer, changing issues such as risk-sharing. He gave no details.
Senior German officials were expected to meet Monday to discuss the situation, following a meeting Friday hosted by Chancellor Angela Merkel. Guttenberg has said a “basic decision” on Opel’s future should be made this week.
Germany likely would have to provide substantial loan guarantees to any new owner. Opel employs some 25,000 people in Germany, nearly half GM Europe’s total work force.
“It is good that there is now a real bidding competition,” said Foreign Minister Frank-Walter Steinmeier, who is also vice chancellor. “That is useful to Opel and its employees and contributes to limiting the risks for state help.”
Auto parts maker Magna said its bid with Sberbank would leave 10 percent of Opel with the company’s workers and involve a 700 million euros ($977 million) investment.
Fiat wants to wrap Opel into a global car-making powerhouse along with Chrysler LLC. Few details have emerged of the third bid, by New York-based buyout firm Ripplewood Holdings LLC.
“We now have three offers for an Opel takeover, but that doesn’t mean that one of them will automatically come to fruition,” Guttenberg was quoted as telling the Bild am Sonntag newspaper.
“We must first have a high degree of certainty that the significant tax money we will have to provide is not lost,” he added. “From my point of view, none of the three offers so far provides this certainty in a sufficient way.”
“If these deficits were to remain, an orderly insolvency would clearly be the better solution,” Guttenberg was quoted as saying.
U.S. parent GM faces a June 1 deadline to restructure or file for bankruptcy. With Germany’s national election looming in September, Berlin is keen to ensure the future of the Ruesselsheim, Germany-based Adam Opel GmbH.
German officials say it is up to GM to choose Opel’s investor, but Berlin will decide whether and how to lend state support to the selected bidder.
Fiat’s plan has raised fears of large job cuts. However, Fiat CEO Sergio Marchionne was quoted as telling Bild am Sonntag that “in the worst case, a maximum of 2,000 jobs in Germany would be affected.”
Magna’s bid faces objections from Juergen Ruettgers, the governor of North Rhine-Westphalia state and a deputy leader of Merkel’s party, who says it would involve too many job cuts at a plant in his state.
Steinmeier, however, has spoken approvingly of Magna’s bid. Guttenberg has not named a favorite.
Steinmeier, the center-left challenger to the conservative Merkel in September’s elections, took a swipe at conservative Guttenberg’s comments about possible bankruptcy.
“I advise everybody finally to stop the talk about an Opel insolvency,” he said. “We should focus all our energy on saving as many jobs as possible at Opel.”
