Obama gives the United Auto Workers 55% equity in the restructured Chrysler Corporation, and the UAW immediately announces that they will sell their share for cash to be used to fund their retirees' health care costs.
At the same time, Obama tells the original Chrysler creditors they are only getting 30% equity.
How much did the UAW invest in Chrysler? Answer: Not a single penny! They only took money from Chrysler for decades until they sucked the lifeblood out of the company and destroyed it.
This is nothing more than a political payback for all those campaign contributions from the UAW...
UAW TO CHRYSLER: IT WILL SELL 55% STOCK STAKE TO TRUST
By JOSH KOSMAN
May 5, 2009
Even the guys who build Chryslers don't believe in their employer's stock.
The United Auto Workers union said yesterday it has no plans to keep its 55 percent stake in the new Chrysler and looks to sell the shares into a trust that will fund retiree health-care costs, a union official said.
Noting that Chrysler's stock is now worthless, UAW President Ron Gettelfinger said the union is taking on a huge risk by using the Chrysler stock to fund the trust, which is known as a voluntary beneficiary association, or VEBA.
Gettelfinger noted the VEBA currently is "on life support," as it is starting out with $1.5 billion from an existing health-care trust and will get just $300 million from Chrysler next year.
The revelation comes as the Obama administration's efforts to push Chrysler through a fast-track bankruptcy may be decided today.
A US Bankruptcy Court judge is expected to rule on whether a small group of lenders unhappy with the Chrysler bankruptcy process will get a chance to have their objections heard. If they get the judge's nod, it could delay the court proceedings until their objections are ruled upon, thus all but ensuring that Chrysler misses its goal of resolving the bankruptcy before the Memorial Day weekend.
Chrysler maintains the only way for it to survive while it idles its plants is to move quickly through the bankruptcy court and sell itself to Fiat in time to launch its 2010 line.
However, the renegade creditors, which represent about 10 percent of the lenders, have first claim on Chrysler's assets, and should be getting more than the proposed 30 cents on the dollar.
The lenders are particularly upset that the restructuring plan on deck gives the UAW a 55 percent stake, even though legally the union ranks lower on the creditor scale than the dissident lenders.
In an exchange yesterday, Judge Arthur Gonzalez told Thomas Lauria, the lawyer representing the renegade creditors, that "If the sale doesn't go through, your value [and the value of the company] diminishes."