General Motors will give the United Auto Workers union 17.5% of its common stock, $6.5 billion of preferred shares and a $2.5 billion note to finance a trust that will take over retiree health care costs starting next year.
The funding is part of a tentative agreement that union members will vote on this week as GM tries to pull together the remaining pieces that would allow it to restructure outside of bankruptcy.
Members of the Canadian Auto Workers union approved wage reductions and other concessions Monday, but GM's unsecured bondholders have resisted an offer to take a 10% stake in the company to wipe out $27 billion in debt. Analysts say it's unlikely enough bondholders will approve the offer, meaning GM would still be forced into bankruptcy protection by next Monday.
Plant-level union officials met in Detroit on Tuesday to hear details of the agreement that GM, the UAW and the government reached last week. Several local presidents said after the briefing that they voted unanimously to recommend that members approve the concessions.
Local union leaders said the 14 factories that GM intends to close were not identified in the agreement or by UAW international officials. Those are part of GM's restructuring plan to be submitted to the government by the company's June 1 deadline, said one of the officials, who spoke on condition of anonymity because the details of the meeting have not been presented to union members.
The company did commit to reopening three closed assembly plants and one stamping factory if demand warrants, according to the summary sheet. The factories were not identified.
Mike Green, president of a UAW local at a Cadillac factory in Lansing, Mich., said the leaders know it's better to have an agreement in place in case GM is forced into bankruptcy. Union members will vote on the concessions Wednesday and Thursday.
"If you don't ratify it, you go into bankruptcy court with nothing," Green said. "If you go in with this, at least you have an agreement here. It's a good-faith agreement."
Green said it shows the union is working to help save GM.
"It's too bad everybody didn't, and that's talking about the bondholders," he said.
GM's bondholders have argued that the offer they've received gives them too small a stake for the amount they are owed.
The Associated Press obtained a summary of GM's agreement with the UAW, which also gives the union trust fund a warrant for another 2.5% of GM's stock.
The summary says most of GM's 61,000 hourly workers will get another buyout and early retirement offer, this one sweeter than the most recent one.
Production workers will be offered $20,000 plus a $25,000 car voucher for early retirement, while skilled trades workers will get $45,000 plus the car voucher.
Buyout packages include $115,000 and the car voucher for employees with 20 or more years of service. Those with less than 10 years would get $45,000 and the car voucher to leave the company.
The summary also says GM will take back five facilities from Delphi, its former parts arm now in Chapter 11 bankruptcy protection.
GM will take ownership of Delphi Saginaw Steering in Saginaw, Mich.; Delphi Thermal Systems in Lockport, N.Y.; Delphi Powertrain in Rochester, N.Y.; Delphi Powertrain Systems facilities in Rochester, N.Y., and Grand Rapids, Mich.; and Delphi Electronics and Safety in Kokomo, Ind.
Officials from UAW locals that represent Ford Motor workers also attended Tuesday's GM meeting to find out details of the concessions.
Ford already has reached a deal with the union to cut labor costs, but GM's agreement has far steeper cuts. Ford officials have said they will seek further changes so that its deal with the union is similar to GM's agreement.
General Motors has been trying to overhaul its business so it can keep receiving federal money to stay afloat as it deals with soaring costs and slumping sales. On Friday, the Detroit automaker borrowed $4 billion more from the federal government on top of the $15.4 billion it has already received.
GM plans to announce the closing of 14 more factories as part of its previously announced effort to shutter 16 plants to trim production and cut costs. The moves will lay off 21,000 workers.
Two of the 16 closures have been announced previously: an engine plant in Massena, N.Y., and a parts stamping plant near Grand Rapids, Mich.