Tuesday, May 26, 2009

UAW's sweet sweet terms...





AlphaNinja - I've long been of the opinion that GM can be one of two things - green or profitable. They were forced to sell small cars at a loss in order to comply with CAFE (corporate-average fuel economy) standards. Had GM been exclusively selling its profitable SUV's, while the Japanese satisfied the demand for smaller cars, they would be sitting on tens of billions more cash, and probably wouldn't need government assistance...

That's all out the door. The GM situation might make the Chrysler ripoff look tame. Now the company can sell whatever they want, maybe even $60,000 hybrids, because the government will subsidize half the cost. A truly remarkable trainwreck.

Of $20billion owed to the UAW, they appear to be getting back $19billion, or 95% of their money, while other creditors no lower on the capital structure will receive closer to 10% of theirs. This is CRIMINAL.

From the WSJ:

"Under the deal with GM, which was agreed to last week and is set for a UAW vote in coming days, GM will place $10 billion of assets into a retiree health-care fund on Jan. 1, 2010. The UAW also receive a new note, payable in cash, for $2.5 billion. That note will be paid out in three installments taking place in 2013, 2015, and 2017.

The UAW health-care trust had been owed $20 billion by GM, but the union—responding to Treasury Department demands—has agreed to cut the cash obligation and receive a significant amount of what it is owed in stock or notes.

In addition, the UAW will be given $6.5 billion in preferred stock in a reorganized GM. That stock includes a 9% cash dividend, under which the union's trust fund will receive $585 million annually for as long as the UAW holds the stock. The preferred stock is in addition to 17.5% of the company's common stock that is being promised by GM to the trust.

The union gathering came hours ahead of the deadline for GM's bondholders to decide whether to turn in up to $27 billion in debt for a collective 10% stake in a restructured GM"

And the bondholders, as is their fiduciary duty to their clients, flatly rejected this proposal. How are they treated in the press? Below is a screenshot from YahooFinance. Gotta love that unbiased journalism....
Recalcitrant, from the online dictionary:

1: obstinately defiant of authority or restraint
2 a: difficult to manage or operate b: not responsive to treatment c: resistant


No comments:

Post a Comment