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GM (GM) UAW workers have ratified the new contract with the brand new VEBA. GM corporately does not want to embarrass the union. But who got a better deal? There has been a lot of hype so here are some facts which may surprise you.

The best source of information comes from the UAW web site in the message to Retirees. GM will hold a conference call on Oct 15 to discuss the labor contract. They have promised an 8K in the next four days.

GM will transfer $24.1 Billion in cash in Jan of 2008. But they will continue paying retiree health care benefits until Jan of 2010 without any changes. The market is under the impression that the changes are almost immediate whereas they really have another two years before they kick in.

GM will also issue a convertible debenture to the VEBA. This note will have a face value of $4.3725 billion. The interest rate is currently undisclosed. The maturity date is undisclosed. The conversion rate is undisclosed. This is essentially a non cash transaction. But if you are trying to track the EPS and want to know what the float is this convertible will form a critical part of your calculations.

If GM is shedding a $51 Billion obligation they have done well. If the stock goes up they have avoided some large cash payments. The debenture needs to be assessed in light of the health care issue and not compared to market pricing.

GM investors both large and small need to understand how this debenture works. The market cannot rely on union leadership selling a deal to their own membership for disclosure information.

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