Ford to sell up to 300 million shares, boost retiree health fund

By BRENT SNAVELY
FREE PRESS BUSINESS WRITER

Ford Motor Co. said today it plans to sell up to 300 million shares and said it would use part of the cash proceeds to fund a retiree health care trust fund.

Ford reached an agreement with the UAW in March allowing the company to fund the Voluntary Employee Beneficiary Association, commonly called a VEBA, with stock rather than cash.

But today, Ford said plans to use the cash from the public stock offering so it can pay a portion of the VEBA payments in cash. Ford also said it would use some of the proceeds from the stock offering for general corporate purposes

Ford is required to pay $1.85 billion to the VEBA by Dec. 31, according to a quarterly report the company filed Friday.

Ford’s stock closed Monday at $6.08 per share. At that price, if Ford sold the full 300 million shares, it would raise $1.82 billion.

“Today’s equity offering is another example of the fast, decisive action we are taking as we build momentum on our plan, including further progress on improving our balance sheet,” Ford President and CEO Alan Mulally said in a statement.

Ford’s stock is up substantially from Feb. 20, when it closed at $1.58. Ford’s stock has benefited in recent weeks from a successful debt restructuring, a modified labor deal with the UAW and because it remains the only U.S. automaker to forgo federal funds.

Still, the company is spending more cash than it is taking in and reported $1.4 billion loss for the first three months of the year.

Contact BRENT SNAVELY: 313-222-6512 or bsnavely@freepress.com