UAW will sell Chrysler stock

While probably a reasonable strategy, this isn't the headline the union needs now - it makes some folks think that the union leadership doesn't expect Chrysler to survive.

UAW Says Won't Control Chrysler - WSJ.com:
"The United Auto Workers president is seeking to distance his union from direct responsibility for the future of Chrysler LLC, noting 55% of the auto maker will be owned by a retiree health care trust fund and not the union itself.
. . .
The trust--known as a Voluntary Employee Beneficiary Association, or VEBA--is supposed to take ownership of 55% of Chrysler as part of a government-brokered cost-cutting plan that union workers ratified earlier this week. Chrysler filed for federal bankruptcy protection Thursday.
. . .
As part of a restructuring worked out before the bankruptcy filing Thursday, the UAW agreed to take half of its debt obligation to its retiree health care trust in equity.
. . .
"This creates additional risk for the retirees' health care; however, with the company being successful, we'll need to turn that stock around, and we have provisions worked in the agreement that even though it won't be a public company until later on, we'll be able to sell those shares under certain circumstances," Mr. Gettelfinger said in his television interview.

Here is another take on the same story.

Health Care Marketplace UAW Planning To Sell Chrysler Stock Obtained From Bankruptcy Deal To Fund VEBA - Kaisernetwork.org:
"United Auto Workers will sell its 55% stake in the reorganized Chrysler as soon as possible to fund a trust that will cover retirees' health care costs, UAW President Ron Gettelfinger said Monday, the AP/Houston Chronicle reports. Chrysler owes about $10.9 billion to the UAW-operated voluntary employees' beneficiary association, which will cover health benefits for about 82,000 retirees and their spouses, as well as future retirees. The trust will start paying out in 2010.

Gettelfinger expressed confidence in the fund but said that it 'will be on life support initially.' Dental and vision benefits for retirees already have been cut from the VEBA, and further cuts are possible, he said (Johnson, AP/Houston Chronicle, 5/4). The fund will start with $1.5 billion from an existing health care trust, and will receive about $300 million from Chrysler next year. Gettelfinger added that all money from the sale of the Chrysler stock will go to the VEBA (Bennett, Wall Street Journal, 5/5)."