DETROIT — The Labor Department said Wednesday that it would let the Ford Motor Company use stock instead of cash to pay some of the $13.1 billion that it owed to a new retiree health care fund, pending a period of public comment.þþThe department’s Employee Benefits Security Administration said it had proposed granting Ford an exemption to federal pension law. Ford said that it needed the exemption so that it could move ahead with an agreement reached this year with the United Automobile Workers union that allowed Ford to substitute stock for up to half of its obligations to a union-managed health care fund.þþHealth care coverage for about 285,000 Ford retirees and their dependents, along with some active workers will shift on Jan. 1 from Ford to the fund, known as a Voluntary Employee Beneficiary Association, or VEBA. The fund, created by Ford’s 2007 contract with the U.A.W., is expected to help Ford eliminate billions of dollars in future liabilities.þþGeneral Motors and Chrysler have also created retiree health care funds that take effect next month.þþAfter the recession left all three automakers running short on cash, they persuaded the U.A.W. to let them substitute company stock for some of their debts to the funds.þþAfter this year’s bankruptcies, 55 percent of Chrysler and 17.5 percent of G.M. are owned by their respective VEBA funds. Ford did not file for bankruptcy protection and remains a public company.þþFord’s shares are now worth more than five times their value in February, when the U.A.W. agreed that it would accept stock for some VEBA payments. The automaker owes an initial payment of $1.9 billion to the retiree fund at the end of the month, with up to $600 million of that amount payable in stock.þþThe proposed exemption would allow Ford to transfer securities to the fund, allow Ford and its health plans to reimburse each other for payments paid by the wrong entity as benefits are transferred to the fund, and let Ford recover deposits mistakenly made to the plan.þþ“The law gives the Labor Department authority to grant exemptions that protect the interests of plan participants and beneficiaries,” the department said in a statement.þþThe department’s proposal calls for the appointment of an independent fiduciary to represent the plan during any transactions related to Ford securities, in order to ensure that any action is in the interests of its beneficiaries. Benefit payments would be reviewed by an independent, third-party administrator and auditor.þ
Source: NY Times
