DETROIT (Reuters) - General Motors Co has
reached a deal in principle with union leaders representing its
workers in Europe on investment in new vehicles over the next
four years and agreed to pay a penalty of over 1 billion euros
) if it fails to reach those targets.
The disclosure was included in GM's quarterly filing with
U.S. securities regulators and came a day before the top U.S.
automaker was expected to file a registration for an initial
public offering of stock.
GM's European operations remain a weak link for a company
that was turned around in bankruptcy in 2009 with $50 billion
in U.S. government funding.
Late last year, in a move spearheaded by Chairman Ed
Whitacre and incoming Chief Executive Dan Akerson, GM scrapped
plans to sell off its Opel unit to auto supplier Magna in a
deal that had the backing of Germany's government.
GM said in June it would raise the 3.3 billion euros needed
to restructure Opel without government financing in Europe.
In the quarterly filing with the U.S. Securities and
Exchange Commission, GM said it had reached a tentative
agreement with European union representatives and expected to
have a final deal by the end of September.
Under the terms of the tentative deal, GM agreed to pay
Opel workers up to 265 million euros for each year in the 2011
to 2014 window that it fails to meet its commitment to spend on
investment in new products and jobs, GM said.
"Management has the intent and believes it has the ability
to meet the requirements under the agreement," GM said in a
discussion of risks for its operations expected to detail many
of the same issues it will raise in its IPO registration.
GM also said that its China joint venture partner SAIC had
helped it secure a $400 million line of credit from a
commercial bank earlier this year. In that deal from February,
SAIC took a 51-percent stake in what had been a 50-50 joint
venture in a crucial market for GM.
GM said in its filing with the SEC, GM said that SAIC would
purchase the ownership share in Shanghai General Motors that
was pledged as collateral for the $400 million bank loan if GM
ever defaulted on the $400 million loan.
(Reporting by Kevin Krolicki; editing by Bernard Orr)