Chrysler’s IPO UAW trust has $3 billion shortfall image

The trust that pays the health-care costs of some union retirees of Chrysler Group LLC is now facing $3 billion in unfunded obligations, while mulling to get the most for its 41.5% stake in the automaker that Fiat wants.

The trust’s benefit obligations went down by $414.9 million to $13.4 billion during 2012, according to its amended 2012 financial statement. During that period, the net value of its assets surged to $10.3 billion, buoyed mainly because of a jump in the estimated value of its 41.5 % stake in Auburn Hills, Michigan-based Chrysler.

While the shortfall came down from more than $5 billion a year earlier, the trust needs to maximize the value of its Chrysler holdings to successfully cover the projected cost of the retirees’ health care. because it didn’t settle on a price with Sergio Marchionne, the chief executive officer of Chrysler and Fiat, the union trust last month made him allow the filing of a Chrysler initial public offering. Marchionne has been fighting  to merge the two companies for the last four years to set up an automaker able to finally compete globally. 

The trust, which is a voluntary employee beneficiary association, or VEBA, acquired its Chrysler holding due to the automaker’s 2009 government-financed bankruptcy, which also ceded the rest of the company to Fiat SpA.

Via Bloomberg