The United Auto Workers union has overwhelmingly ratified a new cost-cutting labor agreement with General Motors Corp , clearing a major hurdle in the automaker's restructuring efforts.

UAW President Ron Gettelfinger said at a news conference on Friday that 74 percent of the UAW-represented workers have ratified the agreement, under which the union would receive a 17.5 percent stake in a restructured company in return for retiree healthcare concessions.

The amended agreement covers about 54,000 U.S. hourly workers in 46 plants and warehouses.

The ratification comes as GM races to slash debt and labor costs ahead of a government-imposed deadline of June 1. The No. 1 U.S. automaker is widely expected to follow smaller rival Chrysler LLC into bankruptcy protection with the financial backing of the U.S. Treasury.

GM is going to have a clean balance sheet when this is over, Gettelfinger said at the conference. He added the new contract represents a dramatic reduction in benefits and a lot of risk for the future for retirees.

Under the agreement, GM would pay half of its $20 billion debt owed to a union-aligned healthcare trust in stock, instead of cash.

The deal would give the healthcare trust, or Voluntary Employees Beneficiary Association, a 17.5 percent stake in a restructured company and warrants for an additional 2.5 percent stake.

The U.S. government would get a 72.5 percent stake under the restructuring, while GM's bondholders would receive 10 percent and warrants for an additional 15 percent stake.