General Motors Corp on Friday borrowed another $4 billion from the U.S. Treasury and won a cost-cutting deal from Canadian auto workers as a showdown with bondholders set the stage for a bankruptcy filing by the end of the month.
The latest emergency funds extended by the Obama administration take the total government funding to keep GM afloat since the start of the year to $19.4 billion.
GM said it expected that total to rise to $27 billion after June 1, a government-imposed deadline for the embattled automaker to achieve a sweeping restructuring analysts say will require bankruptcy to complete.
The tentative agreement with the Canadian Auto Workers union, if ratified, would reduce hourly compensation costs by about 28 percent after including a round of concessions the union agreed to give in March.
A day earlier, GM won similar concessions from the United Auto Workers to reduce operating costs and pay the union in stock instead of cash to fund a retiree healthcare trust.
Along with plans to drop dealers and unprofitable brands like Hummer, Saturn, Pontiac, Saab and Opel, the pair of labor deals would help clear the way for GM to enter bankruptcy protection with the backing of the Obama administration.
"All of our discussions that we had, it's very likely that they will go into Chapter 11," CAW President Ken Lewenza said at a Toronto news conference to announce the union's tentative contract agreement with GM.
In Europe, GM also appeared to be nearing a resolution of its long-running effort to find a buyer for its Opel unit.
Magna International emerged as the favorite to acquire Opel after top German officials said the Canadian car parts group had submitted a better plan than rival bidders Fiat and Belgian-listed private equity investor RHJ International.
BONDHOLDERS NEXT IN LINE
GM faces a June 1 deadline to restructure its debt and operations and has said it could file for bankruptcy if it fails to get bondholders to agree to forgive some $24 billion -- or 90 percent -- of the amount they are owed.
Under Obama administration orders, GM has offered bondholders a 10 percent stake in a restructured company.
A spokesman for a committee representing GM bondholders said institutional investors solidly oppose that offer as insufficient.
"It's been a universal no from the get-go," said Nevin Reilly, a committee spokesman. "Bondholders are being seen as speculative bad guys; but bondholders are investors, many of whom put their retirement money into GM."
Creditors have complained their rights have been ignored in the restructuring of both GM and its smaller rival Chrysler, which has been operating in bankruptcy since April 30.
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