Dana to terminate non-union retiree benefits in exchange for $78.8 million VEBA trust contribution

By Caroline Salls

Pittsburgh, May 23 - Dana Corp. will pay $78.8 million to fund a Voluntary Employees' Benefit Association (VEBA) trust for its non-union retirees in exchange for termination of retiree benefits under an agreement with the company's official committee of non-union retirees, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Under the agreement, Dana will terminate all of the non-union retirees' non-pension retiree benefits, effective July 1, meaning the company will no longer sponsor or provide any non-pension retiree for these retirees after June 30.

The company will make an initial $25 million deposit to the VEBA trust, with the balance to be paid on the effective date of Dana's plan of reorganization.

If the plan does not take effect by March 31, 2008, then Dana must pay $5 million in cash toward the final non-union retiree VEBA contribution, which will be deducted from the remaining outstanding balance, and Dana must continue to make $5 million cash contributions to the trust quarterly until the plan effective date.

The retiree committee will appoint a VEBA trustee.

In addition, the committee has agreed to support any Dana plan that includes the terms of the retiree benefits termination settlement.

Dana, a Toledo, Ohio-based supplier of components, modules and systems to vehicle manufacturers and related aftermarkets, filed for bankruptcy on March 3, 2006. Its Chapter 11 case number is 06-10354.

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