TOLEDO, Ohio (July 6) — Dana Corp. has entered settlement agreements with the United Steelworkers and United Auto Workers and an investment agreement with Centerbridge Capital Partners L.P.
The USW, UAW settlement will save Dana an estimated annual savings of $100 million by reducing labor costs and replacing Dana´s health care and long-term disability obligations for retirees and union employees with Voluntary Employee´s Beneficiary Association trusts, the firm said.
Details of the settlement include four-year extensions of Dana´s collective bargaining agreements with all of its USW- and UAW-organized U.S. facilities and new agreements with recently organized plants. The agreements will allow the establishment of a two-tier wage structure at certain plants, changes in disability benefits and a freeze on credited service and benefit accruals under pension plans for active union employees.
Dana said once it is out of bankruptcy it will contribute in aggregate about $700 million in cash and about $80 million in common stock of the reorganized company to the trusts.
The company said it will continue to provide benefits for retirees and union employees under its existing plans until it exits bankruptcy.
Centerbridge Capital Partners L.P. agreed to invest up to $500 million in cash for convertible preferred stock in the reorganized Dana and facilitate up to $250 million from other investors.
USW, UAW and Centerbridge all agreed to support Dana reorganization plans that included the terms of the labor settlement and the Centerbridge investment. The agreements are subject to approval by the Bankruptcy Court for the Southern District of New York, where Dana´s Chapter 11 bankruptcy proceeding is pending.