General Motors 2010 Annual Report Download - page 32

GENERAL MOTORS COMPANY AND SUBSIDIARIES
The UST Loan Agreement also required Old GM to, among other things, use its best efforts to achieve the following restructuring
targets:
Debt Reduction
• Reduction of its outstanding unsecured public debt by not less than two-thirds through conversion of existing unsecured public
debt into equity, debt and/or cash or by other appropriate means.
Labor Modifications
• Reduction of the total amount of compensation paid to its U.S. employees so that, by no later than December 31, 2009, the
average of such total amount is competitive with the average total amount of such compensation paid to U.S. employees of
certain foreign-owned, U.S. domiciled automakers (transplant automakers);
• Elimination of the payment of any compensation or benefits to U.S. employees who have been fired, laid-off, furloughed or
idled, other than customary severance pay; and
• Application of work rules for U.S. employees in a manner that is competitive with the work rules for employees of transplant
automakers.
VEBA Modifications
• Modification of its retiree healthcare obligations arising under the 2008 UAW Settlement Agreement under which
responsibility for providing healthcare for International Union, United Automobile, Aerospace and Agriculture Implement
Workers of America (UAW) retirees, their spouses and dependents would permanently shift from Old GM to the New Plan
funded by the UAW Retiree Medical Benefits Trust (New VEBA), such that payment or contribution of not less than one-half
of the value of each future payment was to be made in the form of Old GM common stock, subject to certain limitations.
The UST Loan Agreement provided that if, by March 31, 2009 or a later date (not to exceed 30 days after March 31, 2009) as
determined by the Presidential Task Force on the Auto Industry (Auto Task Force) (Certification Deadline), the Auto Task Force had
not certified that Old GM had taken all steps necessary to achieve and sustain its long-term viability, international competitiveness
and energy efficiency in accordance with the Viability Plan, then the loans and other obligations under the UST Loan Agreement were
to become due and payable on the thirtieth day after the Certification Deadline.
On March 30, 2009 the Auto Task Force determined that the plan was not viable and required substantial revisions. In conjunction
with the March 30, 2009 announcement, the administration announced that it would offer Old GM adequate working capital financing
for a period of 60 days while it worked with Old GM to develop and implement a more accelerated and aggressive restructuring that
would provide a sound long-term foundation. On March 31, 2009 Old GM and the UST agreed to postpone the Certification Deadline
to June 1, 2009.
Old GM made further modifications to its Viability Plan in an attempt to satisfy the Auto Task Force requirement that it undertake a
substantially more accelerated and aggressive restructuring plan (Revised Viability Plan). The following is a summary of significant
cost reduction and restructuring actions contemplated by the Revised Viability Plan, the most significant of which included reducing
Old GM’s indebtedness and VEBA obligations.
Indebtedness and VEBA Obligations
In April 2009 Old GM commenced exchange offers for certain unsecured notes to reduce its unsecured debt in order to comply with
the debt reduction condition of the UST Loan Agreement.
30 General Motors Company 2010 Annual Report