Tag Archives: veba

GM Buys Back all Series A Preferred Stock

Posted on 31 December 2014 by Ken Zino

The preferred shares had a liquidation preference of $25 per and accrued cumulative dividends at a rate equal to 9% annually, which was an expensive ~$350 million annual cost. GM used cheaper debt to buy the stock. Continue reading →

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Chrysler Group Borrows $5 Billion to Pay off UAW VEBA Debt

Posted on 14 February 2014 by Ken Zino

Before the bankruptcy, the UAW had previously – and reluctantly – accepted the notes to cover the health care costs of its retired members. This was a classic, many would say infamous, example of financial engineering under the Wall-Street-owned Bush Administration that removed union health care costs from the balance sheets of Chrysler, Ford and General Motors with a slight of hand trick. Continue reading →

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Chrysler IPO Filing this Week

Posted on 16 September 2013 by Ken Zino

The UAW says the stock is worth $10.3 billion; Fiat says it is worth $4.2 billion. Fiat, of course, saved Chrysler from oblivion in 2009 as part of a controversial U.S. Treasury financed bankruptcy proceeding that essentially handed over Chrysler to Fiat for Fiat’s promise to save UAW jobs and reinvest in the company, but no cash. Continue reading →

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GM Annual Report Says No Dividend is Planned for Common

Posted on 28 February 2012 by Ken Zino

Even though GM common stock traded as high as $39.48 a share – arguably irrational exuberance by small investors after what now appears to be a high IPO price of $33 in November of 2010 – the financial condition of the GM is not strong enough to distribute money to common shareholders. This affirmation comes even though GM posted a record $9.1 billion profits in 2011. Continue reading →

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GM Moves Canadian Healthcare off Balance Sheet to Trust

Posted on 8 November 2011 by Ken Zino

This means that GM Canada is free from any obligations associated with the cost of providing retiree healthcare benefits for eligible CAW represented retirees, surviving spouses and dependents. In exchange, GM Canada will transfer C$0.8 billion in cash and issue C$1.1 billion of notes to the HCT.

In its Q2 earnings GM had obligations of $4.7 billion in debt, $5.5 billion in preferred stock (U.S. government owns 26.5% of GM), $10.8 billion in unfunded pensions, and $10 billion in other post-retirement employee benefits. It’s not clear how GM is going to fund these. It looks like issuing more common stock is not feasible given current share price of ~$24, far below the IPO price of $33 and its high of $39.48. GM will report Q3 earnings tomorrow. Continue reading →

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