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UAW defends its share of GM stock, blasts newspaper

Thursday, May 28, 2009

UAW defends its share of GM stock, blasts newspaper

David Shepardson / Detroit News Washington Bureau

Washington — The United Auto Workers union sent a letter to Congress today, blasting a number of inaccurate stories about the amount of General Motors Corp. stock a union health care trust fund will receive.

The UAW also defended the split between bondholders, the government and the union — noting the sacrifices that auto workers and retirees have already made. The UAW has agreed to take 68 cents on the dollar for what its retirees were owed — or $32 billion for $47 billion in projected liabilities.

"The retirees gave a lifetime of service to GM in return for the promise that they would receive health care coverage during their retirement years," wrote Alan Reuther, the UAW’s legislative director, in a letter to Congress today obtained by The Detroit News.

"They will be forced to live with reduced access to health care and/or a lower standard of living."

The deal calls for new co-pays for lower income retirees, dropping coverage of some prescription drugs and other cost savings.

Some news outlets — including the Washington Post editorial page — reported that the trust fund would receive 39 percent of GM’s equity.

GM disclosed this week that the UAW’s health care trust fund will get a 17.5 percent stake and warrants allowing it to obtain another 2.5 percent.

"We would respectfully suggest that the Washington Post should have determined what the facts were, instead of issuing an inaccurate editorial based on rumors," Reuther wrote. "It is simply not tenable for the Washington Post to complain that the equity division somehow ‘ignores basic principles and economic realities.’ "

Last month, GM said the UAW trust fund and the Treasury would split 89 percent of GM’s stock — and that the Treasury would hold at least a majority. But it never disclosed the precise split.

The UAW will receive preferred stock that will pay $585 million per year in dividends and a note for $2.5 billion. The trust will initially be funded with $10 billion in cash — half of what the trust was owed.

The Washington Post editorial page editor, Fred Hiatt, wasn’t in the office today and the paper didn’t respond to an immediate request for comment.

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