GM to take $1.2 billion charge
DETROIT (Reuters) -- General Motors Corp. said Thursday it will take a fourth-quarter charge of about $1.2 billion before taxes to cover costs of employee payments it agreed to make in its new contract with the United Auto Workers union.
GM also said it believes it can terminate an option that would have forced it to buy the troubled Fiat Auto business from Italy's Fiat SpA.
The union contract, approved by members last month, includes lump-sum payments of $800 a year for four years to retirees and $1,000 vouchers toward the purchase of a new GM vehicle.
These items will result in the charge, which amounts to $725 million after taxes, the world's largest automaker said in a regulatory filing.
GM also said that it will likely take some unspecified "global operating charges" in the fourth quarter for "appropriate actions to improve automotive profitability in the future."
GM spokesman Jerry Dubrowksi said the company could offer no further details beyond what was mentioned in the filing. GM Chief Financial Officer John Devine briefly mentioned the charges during third-quarter earnings, saying "we have some more work to do in Europe and Latin America in terms of improving our profitability."
GM said in the filing that Fiat's recapitalization plan to raise funds earlier this year and the sale of certain assets breached the terms of a so-called put option that gave Fiat the right to sell Fiat Auto to GM at a later date.
Those actions "represent material breaches of the Master Agreement, with the result that the Master Agreement, including the Put (option), is terminable by GM," the automaker said in the filing.
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