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Strikes would imperil bailout funding General Motors Corp. and Chrysler LLC would be in default of up to $17.4 billion in federal loans if the United Auto Workers or another union engaged in a strike or work stoppage, a loan provision that essentially strips the union of a powerful negotiating tactic it has used several times in recent years.
The provision is buried deep in the Loan and Security Agreement between GM and the U.S. Treasury Department governing the use of up to $13.4 billion in short-term loans that prevented the automaker's collapse, according to documents filed Wednesday with the U.S. Securities and Exchange Commission. Other events that would trigger a default include failing to make a payment on time or voluntarily filing bankruptcy.
The strike disclosure comes as GM continues talks with the UAW to pursue concessions that would help transform the automaker into a smaller, viable company. While the UAW is not a party to the loan agreement, the union would endanger GM's survival by waging a strike, a tactic it used last year against American Axle & Manufacturing Holdings Inc. and in 2007 against GM and Chrysler before reaching landmark labor deals.
"I can't see that a strike would serve any benefit right now," said analyst Aaron Bragman of IHS Global Insight. "It sounds like maybe some Republican union-busting language got in there, which would not surprise me."
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