TEL AVIV EST Feb. 8, 2009

GM reportedly to negotiate debt restructuring this week
Automaker also said to be planning thousands more jobs cuts
By MarketWatch
Last update: 1:03 p.m. ^{EST Feb. 8, 2009}
Comments: 53
TEL AVIV (MarketWatch) -- General Motors Corp. plans to meet with its bond-holders and union officials on Monday and Tuesday to negotiate a government-ordered debt restructuring, according to a news report Sunday.
Detroit auto giant GM (GM:
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GM 2.84, -0.02, -0.7%) aims to reduce $27.5 billion of unsecured debt to about $9.2 billion by swapping the securities for equity, Bloomberg News reported, citing two people close to the talks.
GM must file a status report with the U.S. Treasury on Feb. 17 as part of an agreement to maintain $13.4 billion in loans the automaker needs to avoid bankruptcy.
"As we continue our restructuring and work toward meeting the terms of the term loans, GM is providing certain necessary information to key stakeholders' advisers so they can appropriately evaluate the decisions they will have to make," the report quoted a GM spokeswoman as saying.
The 10-member bond-holder committee includes San Mateo, Calif.-based Franklin Resources Inc. (BEN:
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If GM can't convince the bond-holders and the United Auto Workers union to agree to new terms, the government could force the company to return the loans or convert them into funding for a government-backed bankruptcy, the report said.
More layoffs ahead?
GM also plans to cut thousands of salaried jobs, possibly as many as the 5,000 it eliminated last year, the Bloomberg report said.
The automaker is offering retirement incentives to most of its 62,000 workers who belong to the UAW, the report said, adding that the buyouts include $20,000 cash plus a $25,000 voucher for a new car, the report said.
GM would like to get more than 10,000 union workers to leave and is expecting at least half that many to accept before the March 24 deadline, the report quoted an unnamed source as saying.
The survival strategy also includes a plan for GM to sell, drop or de-emphasize half of its brands and to cull 1,700 U.S. dealers from its 6,400 total.
Under the terms of the federal assistance it is receiving, the company must also reduce UAW labor costs to close to that of foreign automakers with operations in the U.S., including Toyota Motor Corp. (TM:
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It also plans to make a separate equity swap to reduce obligations to a union-retiree health-care fund by 50% to $10.2 billion, the report said.
The UAW has signaled it will make concessions if other stakeholders also do so.

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