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GM, UAW Reach Deal on Concessions

05/22/2009
General Motors Corporation (GM) has cleared a hurdle in its fight to avoid bankruptcy by reaching a tentative agreement with the United Auto Workers (UAW) union on labor concessions. The Detroit Free Press reports that the deal includes similar terms to those that the UAW reached with Chrysler. The UAW, which did not otherwise comment on the deal, says it is in the process of scheduling a membership vote on the contract changes; GM has not commented publicly. Industry analysts say that the labor agreement may motivate some of GM's bondholders to consider exchanging their debt for a 10 percent ownership stake in the reorganized company. "I think there's a shot it will succeed, but a very small one," says David Cole, chairperson of the Center for Automotive Research, quoted in The New York Times. The Times says 90 percent of bondholders must agree to the debt-for-equity swap in order for GM to avoid bankruptcy; the deadline is next Tuesday.

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