GM Gets $4 Billion in New U.S. Funds

General Motors Corp. on Friday said it received $4 billion in U.S. aid, $1.4 billion more than it had originally requested, as part of its plan to pay suppliers and dealers before a June deadline.
The auto maker, already subsisting on $15.4 billion in government loans, previously had asked the Treasury for an additional $2.6 billion before June 1 and $9 billion after that date for working-capital needs.

Separately, GM reached a tentative cost-cutting deal with the Canadian Auto Workers union Friday that, along with a similar agreement from GM's major U.S. union, paves the way for an expected bankruptcy filing as soon as next week.

The union deals, which must be ratified by workers, came amid signs of progress Friday on a sale of the auto maker's European operations. GM is unlikely to consider a Chinese auto maker's interest in its Opel unit because talks with others are well along, said a person familiar with the matter.

The auto maker is eager to wrap up cost cuts that would allow it to execute a quick bankruptcy restructuring. GM, in a statement, said the request reflects "updated timing of when certain expenses would be incurred" and not additional funding.

The company's shares fell 26% in heavy volume Friday to $1.43 in 4 p.m. composite trading on the New York Stock Exchange.

The labor agreements leave unsecured bondholders as the major impediment to any fast exit from bankruptcy. Bondholders have opposed a plan to pay them 10% of GM's equity.

In Friday's deal the CAW agreed to freeze wages, increase employees' share of medical costs and bar pension rises until 2015. Thursday, the United Auto Workers union agreed to similar concessions for GM's U.S. workers.

CAW President Ken Lewenza said Friday that a bankruptcy filing by GM is now "very likely." GM still hopes for an out-of-court restructuring but wouldn't try to void the deal in bankruptcy court, Mr. Lewenza said.

The Canadian government followed President Barack Obama in shooting down an earlier round of concessions and demanding deeper cuts as a condition of its support. Mr. Lewenza said the government agreed to the deal late Thursday. "The consequences of saying no would have been disastrous," Mr. Lewenza said. "Government support comes with a price. And, for us, that price is a growing list of demands."

Workers are expected to vote on the contract Sunday and Monday. Mr. Lewenza said the deal will save GM $8,600 Canadian dollars (US$7,555) per member over the life of the contract.

In another development, Ford Motor Co. said it would extend to June 26 the deadline for its hourly workers to accept buyouts. The deadline was Friday. The extension could be a sign Ford hasn't achieved a desired level of acceptances.

Separately, GM signaled it was unlikely to consider a Chinese auto maker's interest in Opel, according to a person familiar with the matter. A letter expressing interest in the operation was received Thursday. It didn't include a specific offer, that person said. He declined to identify the auto maker.

GM has bids from three parties and considers the process too far along to reopen, the person said. Italy's Fiat SpA submitted a formal offer for Opel and Vauxhall. It plans to integrate GM's European, Latin American and South African operations into a global alliance with its own auto unit and Chrysler.