Saturday, October 18, 2008

VEBA Payments By GM are Due To start in 2010! Is this why there is a merger Coming?

The VEBA Payments By GM are Due To start in 2010! and Chrysler Happens to have 11.8Billion Dollars! and GM needs Money! This merger sounds real fishy!

Read this article about the VEBA!

UAW VP: GM Hasn't Sought VEBA Delay, Union Willing To Talk

By Sharon Terlep
FLINT, Mich. -(Dow Jones)- General Motors Corp. (GM) hasn't approached the United Auto Workers to push back payments due in 2010 to create a massive fund to pay for retiree health care, a top union official said Thursday.

But the union would "do the right thing" and work with GM if auto makers lacked the funding to pay as scheduled, UAW Vice President Cal Rapson said Thursday at an event to commemorate GM's plans to build a new small-engine factory.

The union and Detroit's Big Three auto makers agreed last year to shift the companies' retiree obligations to the union in the form of company-funded trusts knows at Voluntary Employee Beneficiary Associations, or VEBAs. The VEBAs are slated to take effect in 2010.

GM, burning through an estimated $1 billion a month, has taken a number of dramatic steps in recent months to ensure it has sufficient liquidity to weather the economic downturn and credit crunch. Fears are mounting that the auto maker lacks sufficient cash to survive until 2010, when a number of cost-saving measures will take effect.

Delaying VEBA payments has arisen as a potential option, especially after the UAW agreed to allow GM to push back payments due in 2008 and 2009.

The bulk of VEBA payments begin in 2010.

"We will have to evaluate the situation," Rapson told reporters. "We've got to fund that VEBA and we've got to be able to give our retirees the same service they're getting now."

GM, meantime, is looking to accelerate cost-cutting measures put in place as part of a $15 billion liquidity-boosting plan launched this summer, GM Chief Executive Rick Wagoner reiterated at the same event. The plan calls for saving $10 billion through cuts and raising another $5 billion through asset sales and fundraising moves on capital markets.

Wagoner said the credit crunch and meltdown on Wall Street continue to constrict the company's ability to make deals to either borrow cash or sell assets.

"Our approach is to take as much of this into our own hands as possible," he said.

Wagoner said GM's recent decision to tap the remaining $3.5 billion of its $4.5 billion secured revolving credit facility, a move that raised fears GM was running out of cash faster than expected, was a "defensive measure."

"It made sense to make sure we had the money if we needed it, and the only way to do it is to tap the lines," he said Thursday.

Wagoner also said auto sales remained weak in September, which he described as "not worse, but no better" than August, when GM's sales fell 20%.

U.S. auto sales in recent months have been hit hard by high fuel prices and waning consumer confidence.

-By Sharon Terlep,
Dow Jones Newswires

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