UAW will eventually sell Chrysler stock to keep VEBA going
Big surprise, the United Auto Workers union does not intend to be majority owner of the New New Chrysler for very long. Outgoing UAW president Ron Gettelfinger confirmed in a press conference yesterday that the union's Voluntary Employee Beneficiary Association (VEBA) will likely sell part or all of its 55% stake in the newly formed automaker once its stock appreciates, that is, if its stock appreciates. And why would the UAW want to keep its shares? Despite owning a majority of the company, the UAW's shares are nonvoting and they may only get one seat on the company's board, if that. The sole purpose of the VEBA is to fund retiree healthcare, not run an automaker, so ditching its shares at some point to replenish the fund's coffers sounds like the right thing to do. The funny thing is that before the VEBA was even set up, both General Motors and Ford wanted to fund their contributions partly with company stock instead of cash. Looks like they may get their wish if Chrysler's situation is anything to go by.
[Source: Automotive News - Sub. Req.]
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Reader Comments (Page 1 of 1)
MM 9:03AM (5/06/2009)
What's millions of shares of nothing worth on the stock exchange?
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Rob 9:31AM (5/06/2009)
Burn. And once htey do sell it, then what? How are they going to continue to afford retired person's healthcare?
BigWill 12:48PM (5/06/2009)
"How are they going to continue to afford retired person's healthcare?"
Obama will tell Treasury that the fund is really a bank, so Timmy Geithner will start writing TARP checks payable to "VEBA".
mapoftazifosho 9:09AM (5/06/2009)
Screw Chrysler...the UAW members keep their pensions, but salaried employees do not...this is a joke. If they're going to do anything, they had better kill the Chrysler name as NO one is going to buy their products.
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Rob 9:32AM (5/06/2009)
I'd buy this:
http://www.allpar.com/model/concepts/dodge-razor.html
Too bad benz killed it.
Clay Garland 11:04AM (5/06/2009)
The Dodge razor is what happens when a Nissan 350 has a drunken fling with a worn out Audi TT.
Borger 9:15AM (5/06/2009)
MAMMA MIA! Heard in the Fiat Board Room ...
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Steve Lopez 9:45AM (5/06/2009)
I don't understand why the UAW/CAW don't want to work out a deal with Chrysler?
This ship has taken on so much water that it will be at the bottom pretty soon.
Stop the BS and work together and get the job done right!!!
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The Other Bob 9:54AM (5/06/2009)
"I don't understand why the UAW/CAW don't want to work out a deal with Chrysler?"
Uh, they did work out a deal. What do you think is being discussed here?
The retirees will take stock to fund retiree health in place of cash. The UAW will also be responsible for the fund, so Chrysler will have that liability off its books.
Rob 10:08AM (5/06/2009)
Who in their right mind would buy that stock?
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judd 10:33AM (5/06/2009)
You can get change for the amount you get and but some hope.
Bernie 11:23AM (5/06/2009)
Hey Gettelfinger, Good luck with that you short sighted slob.
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rail roaded autoworker 12:35PM (5/06/2009)
The Company gave concesions, the auto workers gave concesions, the dealers gave concesions, the retirees gave concesions, and yet the international gave no concesions as they negotiated our job and pay cuts. I hope they choke on their paychecks.
ederer62 11:36AM (5/06/2009)
The UAW would never keep their stock, It would destroy the UAW. The goal of every company is to increase share holder value, the goal of the unions is to achieve more pay and more benefits for it's members. These goals are competiting values, if either side "wins" it would probally mean that the other side loses. The current problems with the Unionized labour companies are proof.
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why not the LS2LS7? 11:42AM (5/06/2009)
Don't make too much fun. This is the principle behind Ford's debt-for-equity swap too (and GM's if it happens). The people who owned the debt before were supposed to be paid back on a regular schedule. With this swap, they now own stock, and can be expected to sell this stock to replace the lost income from debt repayment.
The UAW VEBA money (from Chrysler) came in the form of equity, but you can't pay medical bills with shares, you have to sell them.
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iQuack 2:01PM (5/06/2009)
Chrysler bondholders who are supposed to be "secured" creditors will take a hit while most of Chrysler is handed over to the UAW whose greedy, strike threats decades ago are largely responsible for killing the company.
UAW members have been overpaid drones for decades, and now they've finally killed their employer. The UAW is getting far more than it should in this lousy deal.
Unions are parasites that ultimately kill their hosts.
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JohnBoy 2:37PM (5/06/2009)
Got Milk?
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J 2:49PM (5/06/2009)
The UAW has been the Death of Corporate Industry as we know it as far as transportation manufacturing goes. If they don't have the UAW in the plants in the south why can't they wither away and die up north. That where most of the cost factors came into play with vehicle manufacturing every year. It would be nice to see Chrysler file and say if you come back leave the UAW card at the door.
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J 2:54PM (5/06/2009)
The UAW has been the Death of The American Automotive Industry as we know it as far as we know it. If they don't have the UAW in the plants in the south, "why can't they wither away and die up north?" That where most of the cost factors came into play with vehicle manufacturing every year (Product delays, added cost on the window sticker, etc.). It would be nice to see Chrysler file for bankruptcy and say if you come back leave the UAW card at the door.
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