Chrysler latest: Union eyes majority ownership

STERLING HEIGHTS, Mich. -- The United Auto Workers union will own 55% of a restructured Chrysler LLC and its retiree health care trust will get a seat on the board if union members vote to approve contract concessions this week.

Chrysler stock could even be traded publicly again, as there are mechanisms for the UAW to sell shares to fund the health care trust.

Factory-level union leaders voted unanimously Monday night to recommend approval of concessions that union President Ron Gettelfinger said would help keep the automaker out of bankruptcy.

A summary of the revised Chrysler-UAW contract says that Italian automaker Fiat Group SpA eventually will own 35% of a restructured Chrysler, with the remaining 10% stake divided between the U.S. government and secured lenders, mostly banks and hedge funds.

The Obama administration required that equity fund at least 50% of Chrysler's $10.6 billion obligation to a union-run trust that will take over retiree health care costs starting next year, according to the summary.

It also said that under the agreement, workers will no longer get most of their pay if they are laid off. Instead, they will get supplemental pay from the company equal to 50% of their gross base pay.

Union leaders say ratification votes across the nation should be finished by Wednesday. That's one day before Chrysler's government-imposed deadline to restructure or the government will cut off aid and send the company into liquidation.

Chrysler is living on $4 billion in U.S. government loans and must win concessions from its unions, swap equity for debt and ink a partnership deal with Fiat. If Chrysler can pull the package together in time, the government has said it will loan a new Chrysler-Fiat partnership up to $6 billion more. Chrysler also could get $500 million to stay afloat through April.

Fiat has been in discussions with Chrysler to take a 20% stake in the Auburn Hills, Mich., automaker in exchange for Fiat's small-car technology.

Under the UAW deal reached with Chrysler, Fiat and the U.S. Treasury Department, cost-of-living pay raises will be suspended through the contract's expiration in 2011, and it adds a provision for binding arbitration on a new contract through 2015. If no agreement can be reached on a new contract, the arbitrator must base total hourly labor costs on a rate comparable to Chrysler's U.S. competitors, including foreign-owned manufacturers.