Fiat's $4.35 billion payoff to UAW, Inc. [as pay-off]

Fiat's $4.35 billion payoff to UAW, Inc.

Jerry White
4 January 2014

On New Year's Day, Italian automaker Fiat agreed to pay $4.35 billion to a United Auto Workers (UAW) trust fund to buy its shares in Chrysler. The deal is a massive payoff to the UAW for the services it has rendered in slashing the wages and benefits of Chrysler workers and boosting the company's profitability.
Carried out behind the backs of Chrysler workers, in the course of closed-door meetings between Wall Street lawyers and consultants, the agreement illustrates the unbridgeable chasm separating the UAW and the rest of the official unions from the working class.
Under the terms of the agreement, Fiat will pay the UAW-controlled retiree health care trust fund--known as a Voluntary Employees Beneficiary Association, or VEBA--$1.75 billion in cash and Chrysler will make a $1.9 billion contribution. Chrysler also agreed to pay the trust $700 million in four annual installments once the sale closes on or around January 20.
The UAW-controlled fund was given a partial ownership stake in Chrysler as a result of the Obama administration's forced bankruptcy and restructuring of the Detroit automaker in 2009. In exchange for the multi-billion-dollar payment announced Wednesday, the UAW will relinquish its 41.5 percent share in Chrysler (Fiat owns the other 58.5 percent) and drop a lawsuit demanding a higher price for its shares. As a result, an Initial Public Offering (IPO) that UAW executives had hoped would drive up the value of its shares has been cancelled. (Read more)
Further coverage on the global auto industry can be found here.