Chrysler Said to Give 20% Ownership to Union Health-Care Fund

[Omaha Steve]

http://www.bloomberg.com/apps/news?pid=20601103&sid=aNHlXenYiPSg&refer=news

By Mike Ramsey and John Lippert

April 17 (Bloomberg) -- Chrysler LLC is nearing a deal to give about 20 percent equity in the company to a trust run by the United Auto Workers union for retiree health care, people familiar with the negotiations said.

A union-run trust would gain ownership in the company in exchange for reducing the company’s $10.6 billion obligation to retiree medical coverage, the people said.

The deal can’t be made final until Chrysler and union officials know whether the automaker’s banks will get a slice of the company’s ownership in exchange for reducing debt levels, the people said.

Chrysler, surviving with $4 billion in U.S. loans, needs to forge an alliance with Fiat SpA by April 30 in order to get as much as $6 billion more in aid. Fiat requires that Chrysler get the reduction in funding for the health-care trust, extinguish most of its debt, and reach new cost-saving labor contracts with the UAW and Canadian Auto Workers unions.

The New York Times reported late yesterday on the union’s equity stake. Talks in recent days have included UAW President Ron Gettelfinger and Ron Bloom, an adviser to President Barack Obama’s automotive task force, the newspaper said.

To contact the reporter on this story: Mike Ramsey in Southfield, Michigan, at [email protected] Lippert in Chicago at [email protected]

Last Updated: April 17, 2009 13:55 EDT

[billyoc]

1. Good. They're 1/5 of the way there.