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INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE & AGRICULTURAL IMPLEMENT WORKERS OF AMERICA – UAW
RON GETTELFINGER, President ELIZABETH BUNN, Secretary-Treasurer VICE PRESIDENTS:
GENERAL HOLIEFIELD
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BOB KING
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CAL RAPSON
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JIMMY SETTLES
IN REPLY REFER TO
May 28, 2009
1757 N STREET, N.W.WASHINGTON, D.C. 20036TELEPHONE: (202) 828-8500FAX (202) 293-3457
Dear Representative/Senator:Recent news stories, editorials and op-eds regarding the GM restructuring planhave contained a number of inaccurate assertions regarding the share of equity inthe new company that will go to various stakeholders. The UAW wishes to set therecord straight on this issue.The real facts are contained in the SEC filing submitted by GM this morning. Asdescribed there:
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the government will receive an initial allocation of 72.5% of the equity in thenew company;
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the bondholders will receive an initial allocation of 10% of the equity, withwarrants that can result in their receiving substantially more; and
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the Trust Fund established to provide medical benefits to retirees willreceive an initial allocation of 17.5%, with warrants representing thepotential for an additional 2.5%. However, the warrants issued to theretiree Trust fund have terms far less advantageous than those issued tothe bondholders.This allocation of equity represents an agreement between GM, the TreasuryDepartment, the UAW and the Committee representing bondholder interests.It is important to recognize several points about this division of the equity in thenew company. The government is receiving an expanded stake in recognition ofthe larger financial contribution that it will be making to facilitate the reorganizationof the company. At the same time, the equity shares being given to thebondholders and the retiree health-care fund should have increased valuebecause the reorganized company will be relieved of most of the liabilities thatformerly burdened GM.Some recent news reports and opinion columns, including an editorial by theWashington Post on May 26th, have asserted that the division of equity issomehow unfair to bondholders because the retiree health-care fund will bereceiving a 39% stake in GM, while the bondholders will only get 10%. As
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