General Motors Struggles to Avert Bankruptcy
May 26, 2009
DETROIT: General Motors today agreed to fund a trust to support retiree health care beginning next year. The move is part of the troubled auto-maker’s effort to restructure without declaring bankruptcy. The United Auto Works union received 17.5 percent of GM’s common stock, $6.5 billion in preferred shares and a $2.5 billion note, the Associated Press reported. GM plans to close 14 manufacturing facilities as part of a restructure due to the federal government June 1.
The auto maker must meet certain terms to continue receiving federal bail-out money. The government lent GM another $4 billion on Friday in addition to the $15.4 billion it previously provided. About 21,000 jobs will be cut in the factory closures.
GM received federal approval last week to exchange post-restructure shares for $27 billion in bonds. Reuters said interest in the exchange has been “tepid,” and that if GM couldn’t retire around $24 billion of its old bond debt for the new exchange, it would likely file for bankruptcy.