A United Auto Workers-aligned healthcare trust would quickly sell shares it would receive in a new Chrysler as soon as it could, union president Ron Gettelfinger has said.
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The UAW healthcare trust would receive a 55% stake in a new Chrysler, but no voting role on the board, under a sale plan the automaker filed with the US bankruptcy court late on Sunday that would speed the bankrupt automaker’s alliance with Italy’s Fiat, Reuters reported.
Fiat would hold a 20% stake in the new Chrysler, but control the automaker, which also would be 8% held by the US government and 2% by the Canadian government.
According to Reuters, Gettelfinger said the healthcare trust, a Voluntary Employee Beneficiary Association, would be very stressed initially through its acceptance of Chrysler equity for part of the funding of the trust.
In its historic agreement to establish the healthcare trust in 2007, the UAW accepted roughly 60 cents cash to cover projected obligations and the latest concessions make half that funding in Chrysler equity and stretch the cash payments.
Benefits to UAW retirees will be reduced from 1 July due to the initial tightness on funding of the trust, the report said.
“As you can see, as soon as the VEBA’s in a position to where we can sell stock, we will be required to sell stock in order to keep the benefits going,” Gettelfinger told Reuters during his first press conference since Chrysler filed for bankruptcy protection on Thursday in Manhattan.
“Now the first couple of years, it’s going to be tight,” Gettelfinger said, adding that the healthcare trustees would have the authority to make cuts in retiree benefits if necessary to keep the trust viable.
“If Mr Marchionne comes in here and turns this company around, then we should be in pretty good shape, and … maybe even add some of the benefits back, but we’ve first got to get there,” Gettelfinger said.
Gettelfinger said the union’s concessions to Chrysler would improve the automaker’s cash flow dramatically, providing “billions and billions” of dollars of relief.
He also said that he did not expect the agreement between the union and Chrysler to differ greatly from one the UAW must complete next with General Motors.
