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The United Auto Workers’ retiree health care trust unloaded 40 million of its shares in General Motors Co. worth $1.6 billion, a move that risks the trust’s ability to replace retired UAW Vice President Joe Ashton on the automaker’s board of directors.

The UAW Retiree Medical Benefits Trust is still likely GM’s largest stakeholder with a remaining 100.15 million shares. But that might fall below the threshold detailed in the 2009 stockholder’s agreement between GM, the UAW trust and the U.S. Treasury that guarantees the trust representation on the board.

The 2009 agreement says the UAW trust must own at least 50 percent of the shares it initially acquired following the automaker’s federally-induced bankruptcy. But it’s unclear if the initial number of shares acquired includes a three-way stock split ahead of GM’s November 2010 initial public offering that increased the UAW trust’s shares from 87.5 million to 262.5 million.

The UAW’s health care trust sold 40 million GM shares Friday valued at $39.71 each, according to a filing with the Securities and Exchange Commission. In an earlier filing last Tuesday, GM detailed the trust’s intention to sell nearly a third of its stake in the automaker.

If the UAW trust’s 262.5 million shares reported in GM’s 2010 filing with the SEC are considered its original acquisition, the trust’s holdings would fall to 38 percent of what it initially acquired, no longer guaranteeing a board seat. But based on the 87.5 million shares reflected in the 2009 stockholder’s agreement, the UAW trust actually owns some 12 million more shares than first amassed.

The UAW trust lost its representative on GM’s board in December when Ashton abruptly resigned. It wouldn’t be able to nominate a replacement until the automaker’s annual shareholders’ meeting in June, at which time issues of governance would be addressed, a GM spokesman said.

As a large shareholder, the UAW trust still is empowered to nominate someone for the board in June. At issue with the stock sale is whether that board seat would be guaranteed.

Talks are continuing between GM, the UAW and the health care trust on whether the union trust would keep the seat, according to sources familiar with the situation. In a year-end roundtable, UAW president Dennis Williams said the union intended to keep the seat vacated by the resignation of Ashton.

A spokeswoman for the retiree trust declined to comment on discussions surrounding the UAW trust’s place on GM’s board of directors, and deferred comments on the stock sale to Brock Fiduciary Services, the trust’s independent fiduciary and investment manager for its GM shares. A representative from Brock did not immediately respond to request for comment.

The UAW retiree trust will receive all of the proceeds from this offering, and none of the shares are being sold by GM, according to the automaker’s Tuesday statement. GM plans to repurchase a portion of the 40 million shares the trust is selling, valuing about $100 million as the price per share at the time of the offering. Based on GM’s closing listed in the SEC filing, that would amount to about 2.5 million shares.

The UAW trust’s share sale comes as federal officials are pressing ahead with an investigation of the joint training centers funded by Detroit’s three automakers. A vice president of Fiat Chrysler Automobiles NV and the wife of a deceased UAW vice president already have pleaded guilty to charges in an alleged scheme involving the embezzlement of hundreds of thousands of dollars from the funds earmarked for member training.

It’s still not clear what caused Ashton’s sudden resignation, which GM announced in a four-sentence news release at the time. He left the board shortly after being linked to a federal grand jury investigation into auto industry corruption.

Ashton also resigned amid a separate internal investigation GM launched this fall after learning of the widening federal investigation. His departure came six weeks after The Detroit News reported that he had drawn the scrutiny of federal agents looking into potential corruption at UAW joint training centers funded by all three automakers.

NNaughton@detroitnews.com

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