Under the agreement, also signed by Chrysler and its controlling owner, Cerberus, according to the PBGC, Daimler will contribute $200 million dollars into the pension plans immediately upon final execution of the agreement. Daimler also will pay $200 million into the plans in 2010 and again in 2011.
In addition, if the Chrysler pensions terminate before August 2012 and are trusteed by the PBGC, Daimler will pay $200 million to the PBGC insurance program. The PBGC said that the agreement replaces the $1 billion termination guarantee negotiated by the PBGC at the time of Daimler’s sale of Chrysler in 2007 (see PBGC Chief: Daimler, Cerberus Went Above and Beyond in Deal ).
Finally, the PBGC noted that the agreement closes out Daimler’s 19.9% share of Chrysler, and waives repayment of Daimler’s outstanding loans to Chrysler.
Last night the Wall Street Journal reported that the United Auto Workers union would eventually own 55% of the stock in a restructured Chrysler LLC under the deal reached by the union and the auto maker. Citing a summary of that agreement, the WSJ report said that Fiat SpA will “eventually” own 35% of Chrysler, and that the U.S. government and Chrysler’s secured lenders together will end up owning 10% of the company, following reorganization.
Again citing the summary, the WSJ says that Chrysler will also pay a $4.587 billion note into the trust fund, or VEBA, that the union will manage and use to take over the cost of providing health care for retired workers (see UAW and Ford Reach Agreement of VEBA Modifications , Viva VEBA ). The WSJ said the agreement says Chrysler will pay $300 million in cash into the VEBA in 2010 and 2011, and increasing amounts up to $823 million in the years 2019 to 2023.
The VEBA will also own a “significant” amount of Chrysler stock and will be allowed to appoint a representative to Chrysler’s board, the summary said, according to the WSJ, and in the future the VEBA will be allowed to sell the stock to other parties.
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