General Motors, which opened contract talks with the United Auto Workers on Thursday, said the $US13 billion it raised through a recent debt offering would only be paid into its underfunded US pension plans after it reaches a new contract with the union, according to Reuters.
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The news agency said that withholding the money, which GM raised through a massive bond sale last month, could be seen as a strike contingency measure as GM heads into likely difficult talks toward a new labour agreement this autumn.
But GM chief financial officer John Devine, who announced the move in a quarterly earnings conference call with reporters and Wall Street analysts, told Reuters it was not intended as a bargaining ploy.
“We’ll do it following successful negotiations with the UAW,” Devine reportedly said, referring to the previously announced pension payment. “It’s just something that we thought was prudent financial planning; it’s not meant to be a labour strategy.”
Reuters said Devine did not elaborate on GM’s reasons for delaying the sorely needed injection of cash into the pension plan, which was under-funded by about $19.3 billion at the end of last year, but at least one analyst told Reuters the company clearly wanted to have an ample cash hoard in the event of any work stoppage.
“If they do, by some chance, get into a long strike situation it would be nice to have $13 billion around to fund the operations while they’re shut down,” David Healy, an automotive analyst with Burnham Securities, told Reuters.
Reuters noted that, in another apparent contingency measure, Devine also said a recent build-up of GM’s vehicle inventories was something the company deemed appropriate ahead of its labour talks.
An ample stockpile of unsold vehicles could allow it to keep selling new cars and trucks even if the UAW shut down its factories, the report added.
