U.S. Expected to Own 70% of Restructured G.M.
By MICHELINE MAYNARD
Published: May 26, 2009
DETROIT — The government will hold a large share of General Motors after the company emerges from bankruptcy protection, and will provide G.M. with about $50 billion in financing so that it can reorganize, people with direct knowledge of the situation said Tuesday.
The Treasury Department will receive about 70 percent of the new G.M., while the United Automobile Workers union will hold 17.5 percent through its retiree health care fund. The fund also would receive warrants for an additional 2.5 percent of stock in the new G.M., with a price to be determined later, potentially giving it a total of 20 percent.
That is about half of the stock that the U.A.W.’s fund, called a Voluntary Employee Beneficiary Association, or VEBA, was expected to receive under plans drafted this spring.
The figures were outlined to union leaders in Detroit, who met Tuesday to consider a new agreement between the U.A.W. and G.M.
Bondholders will receive about a 10 percent stake of the new company, and others will receive a smaller percentage, these people said.
G.M., which has already received $19.4 billion in financing from Treasury, would get an additional $50 billion or slightly more in debtor-in-possession financing, which it would draw upon during its reorganization.
The Treasury plans to create a new version of G.M. with its most attractive assets, like Chevrolet, Cadillac and some of its manufacturing operations. The rest of G.M. would be sold or liquidated.