GM And UAW Get Close: Stock Could Spike

September 22, 2007 by Douglas A. McIntyre

Late word from Detroit is that GM (GM) and the UAW have agreed to set up a union controlled fund that would handle healthcare payments to the car company’s union workers. The move would take $55 billion off GM’s balance sheet.

As The New York Times pointed out "such voluntary trusts are funded at a discount to the liability, with investments generally ranging from 50 to 70 percent. The greater the funding, the less risk the union faces."

In a piece in Barron’s an analyst speculated that GM’s shares could easily move to $40 if an accord is announced.

Douglas A. McIntyre