Huge Hurdles Remain Over Bondholders And Health Care

By: Associated Press
By: Associated Press

DETROIT (AP) -- General Motors and Chrysler are working to resolve issues that could help them get the billions of federal dollars they say they need in order to become profitable again.

The United Auto Workers union has tentatively agreed to help GM, Chrysler and Ford reduce labor costs, but it still hasn't agreed to accept payments to the union-run health-care trust funds in stock instead of cash.

The trusts would pay health care bills for about 800,000 UAW retirees, spouses and dependents and move billions in liabilities off the companies' books.

And the government wants the union to take up to half of what it's owed as an equity position in the companies.

At the same time, GM's bondholders are holding out on a deal to exchange two-thirds of the company's debt for equity until there's more clarity from the union.

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