Like the deal recently reached by the union and bankrupt Chrysler, the UAW would get a 38% stake of GM for the purposes of funding its VEBA retiree health care trust. Also like its deal with Chrysler, the UAW presumably would not have a controlling interest in GM and sell off its stake as soon as the company was viable.
If true, only two major obstacles remain to avoid a bankruptcy filing before GM's government-imposed June 1 deadline. The first is getting CAW to follow the UAW's lead and sign a new agreement, and the second is to get the majority of GM bondholders to accept a debt-for-equity swap that would erase $27 billion of the automaker's debt but leave creditors with only a 10% stake in the company. The UAW would have its proposed 38% stake, common GM shareholders would hold a 1% stake and the U.S. government would have a majority stake of 51%. Its creditors, however, do not appear willing to accept GM's debt-for-equity offer as it stands, so unless a miracle happens in the next two weeks, a Chrysler-like Chapter 11 bankruptcy filing still appears the most likely result.
[Source: CNN Money, Photo by Bill Pugliano/Getty]