General Motors 2010 Annual Report Download - page 42

GENERAL MOTORS COMPANY AND SUBSIDIARIES
We agreed to acquire, prior to the consummation of the transactions contemplated by the DMDA, all Class A Membership Interests
in New Delphi for a cash contribution of $1.7 billion with the Investors acquiring Class B Membership Interests. We and the Investors
also agreed to establish: (1) a secured delayed draw term loan facility for New Delphi, with us and the Investors each committing to
provide loans of up to $500 million; and (2) a note of $41 million to be funded at closing by the Investors. The DMDA settled
outstanding claims and assessments against and from MLC, us and Delphi, including the termination of the Master Restructuring
Agreement with limited exceptions, and establishes an ongoing commercial relationship with New Delphi. We agreed to continue all
existing Delphi supply agreements and purchase orders for GMNA to the end of the related product program, and New Delphi agreed
to provide us with access rights designed to allow us to operate specific sites on defined triggering events to provide us with
protection of supply.
In separate agreements, we, Delphi and the Pension Benefit Guarantee Corporation (PBGC) negotiated the settlement of the
PBGC’s claims from the termination of the Delphi pension plans and the release of certain liens with the PBGC against Delphi’s
foreign assets. In return, the PBGC was granted a 100% interest in Class C Membership Interests in New Delphi which provides for
the PBGC to participate in predefined equity distributions and received a payment of $70 million from us. We maintain certain
obligations relating to Delphi hourly employees to provide the difference between pension benefits paid by the PBGC according to
regulation and those originally guaranteed by Old GM under the Delphi Benefit Guarantee Agreements.
Investment in Ally Financial
As part of the approval process for Ally Financial to obtain Bank Holding Company status in December 2008, Old GM agreed to
reduce its ownership in Ally Financial to less than 10% of the voting and total equity of Ally Financial by December 24, 2011. At
December 31, 2010 our equity ownership in Ally Financial was 9.9%.
In December 2010 the UST agreed to convert its optional conversion feature on the shares of mandatory convertible preferred
securities held by the UST. Through this transaction, Ally Financial converted 110 million shares of preferred securities into
532 thousand shares of common stock. This action resulted in the dilution of our investment in Ally Financial common stock from
16.6% to 9.9%, of which 4.0% is held directly and 5.9% is held indirectly through an independent trust. Pursuant to previous
commitments to reduce influence over and ownership in Ally Financial, the trustee, who is independent of us, has the sole authority to
vote and is required to dispose of all Ally Financial common stock held in the trust by December 24, 2011. We can cause the trustee to
return any Ally Financial common stock to us to hold directly, so long as our directly held voting and total common equity interests
remain below 10%.
Special Attrition Programs, Labor Agreements and Benefit Plan Changes
During 2009 we and Old GM implemented various programs which reduced the hourly and salary workforce. Significant workforce
reductions and settlements with various represented employee groups are discussed below.
2009 Special Attrition Programs
In 2009 Old GM announced special attrition programs for eligible UAW represented employees, offering cash and other incentives
for individuals who elected to retire or voluntarily terminate employment.
Global Salaried Workforce Reductions
In 2009 U.S. salaried workforce reductions were accomplished primarily through a salaried retirement program or through a
severance program funded from operating cash flows.
Delphi Benefit Guarantee Agreements
The Delphi Benefit Guarantee Agreements were affected by the settlement of the PBGC claims from the termination of the Delphi
pension plan. We maintained the obligation to provide the difference between the pension benefits paid by the PBGC and those
originally guaranteed by Old GM under the Delphi Benefit Guarantee Agreements.
40 General Motors Company 2010 Annual Report