DETROIT — General Motors Corp. and the United Auto Workers were getting close to an agreement on concessions, a person briefed on the negotiations said Tuesday, just hours before GM and Chrysler LLC must submit a restructuring plan to the Treasury Department to justify its federal loans.
Details of the deal were not available. Negotiations went all night Monday and into Tuesday, said the person, who spoke on condition of anonymity because the plan has yet to be submitted.
Both GM and Chrysler were racing to finish restructuring plans to present to the federal government, but final deals with debt holders and union workers may not come until after Tuesday’s government-imposed deadline passes, according to others who also were briefed on the situation.
The people briefed on the talks did not want to be identified because the negotiations are private.
GM scheduled a news conference for 6:30 p.m. to discuss its restructuring plans, and Chrysler planned to hold a conference call with reporters at 5 p.m.
The status of Chrysler’s talks was unknown.
GM on Tuesday received the last $4 billion of the $13.4 billion it was promised by the Treasury Department, White House spokesman Robert Gibbs told reporters aboard Air Force One. Chrysler has received $4 billion.
The plans are supposed to outline how the automakers intend to again become viable and repay the government loans. Ford Motor Co., which borrowed billions from private sources before credit markets tightened, has said it can make it through 2009 without government help.
Two people briefed on the GM plan reported progress Monday toward a deal with the United Auto Workers, but UAW Legislative Director Alan Reuther said he did not expect labor agreements in time for Tuesday’s deadline.
GM executives have said the company only has to show substantial progress by Tuesday, with the whole plan finalized by March 31.
Reuther, who heads the UAW’s Washington office, said the Obama administration’s appointment Sunday night of a task force to oversee the automakers’ restructuring should get things moving.
“I think this is an ongoing process, and having the Obama administration finally putting this task force in operation, hopefully it will be able to facilitate discussions going forward,” Reuther said.
At GM, UAW bargainers walked out of talks Friday night in a spat over the company’s contributions to a union-run trust fund that will take on retiree health care expenses starting next year.
GM’s plan is likely to seek more money, at least up to the $18 billion that it requested from Congress in December under its worst-case scenario projections. That scenario has arrived with U.S. sales at a 26-year low and auto sales dropping in other parts of the world, a person briefed on GM’s plan said.
Video: Bankruptcy the best option? The plan will stick with GM’s public strategy of trying to remain viable and avoiding Chapter 11 bankruptcy protection, said the person, who spoke on condition of anonymity because the plan has not been finalized.
Gibbs said the Obama administration looks forward to reviewing GM and Chrysler’s restructuring plans, and the president wouldn’t rule out a government-backed bankruptcy for the struggling automakers.
GM’s plan will discuss cost savings from labor concessions and additional plant closures, but the locations of those plants will not be revealed, another person briefed on the plan said Monday. The number of factories to be closed wasn’t available.
GM’s board met Monday by teleconference to go over the plan, but details could not be obtained.
The people briefed on the plan said it will include more information about how GM will cut some of its eight brands, although nothing will be finalized. The company already has said Saab and Hummer are up for sale and Saturn is under review, leaving GM to focus on Chevrolet, Cadillac, GMC and Buick, with Pontiac reduced to one or two models.
Earlier, local union officials said negotiations had been slowed by the Obama administration’s delay in appointing a “car czar.” But Sunday night, the White House announced a task force to oversee the companies’ restructuring.
Obama plans to name restructuring expert Ron Bloom a senior adviser to Treasury Secretary Timothy Geithner. While he won’t be the “car czar” point man many labor and business leaders expected, Bloom, a former consultant to the United Steelworkers of America, will be doing much of the financial analysis for the administration.
The competing interests of debt holders also slowed the labor talks, as no stakeholder wants to make concessions before the other.
Under the terms of GM and Chrysler’s loans, both companies must use their best efforts to reach “targets” to reduce debt and labor costs. One target says the automakers need to make half of their payments into the health care trust in the form of stock rather than cash. Another requires the companies to reduce unsecured debt by two-thirds by swapping debt for equity. The terms also seek labor cost parity with Japanese automakers that have U.S. plants.
Video: A survival plan for Detroit The union fears that if it takes too much stock, the trusts won’t have enough to pay benefits for hundreds of thousands of retirees and spouses.
Some bondholders are reluctant to take roughly 30 cents on the dollar because they think even if they don’t go along with the plan, the government won’t allow GM to go into bankruptcy.
“Here you have a competition between bondholders and the union,” said David Cole, chairman of the Center for Automotive Research in Ann Arbor. “That’s where I think the feds become very important as an arbitrator.”
Advisers to the bondholder committee negotiating with GM delivered a proposal Sunday night that is consistent with the government’s terms, according to a person familiar with the talks. The person spoke on condition of anonymity because of the sensitivity of the talks.
Details of the bondholders’ proposal were not available, and the person said additional work remained and talks were continuing Monday night.
GM has about $28 billion in unsecured debt. Chrysler has about $9 billion in mostly secured debt. GM has to pay roughly $20 billion into the health care trust, while Chrysler must pay around $9.9 billion.
Billionaire Wilbur L. Ross Jr., who has rescued numerous failed companies in the steel and other industries, said Monday that GM can’t be cost competitive with Japanese automakers with such a heavy debt burden.
Bondholders, he said, traditionally hang on for the best deal but run the risk of losing it all if GM files for bankruptcy protection.
“Bondholders are pretty famous for playing chicken,” Ross said. “I just hope that they’re rational enough not to overplay their hand here.”
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