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Ford sells off shares

2009-05-12 06:49
Detroit - Ford Motor Co said on Monday that it would sell 300 million common shares and use part of the proceeds to pay off its healthcare obligations to the United Auto Workers under the terms of a recently concluded deal with the union.

Ford also said it expects to grant to the underwriters - Citigroup, Goldman Sachs, JPMorgan and Morgan Stanley - a 30-day option to buy up to 45 million shares of common stock.

Ford is the only US automaker that has not sought government aid.

Ford's stock offering comes on the heels of a successful debt exchange.

Ford said net proceeds from the stock offering would also be used for general corporate purposes.

"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 chief executive Alan Mulally said in a statement.

Ford is trying to raise capital to fund the Voluntary Employee Beneficiary Association (VEBA), a union-run fund set up for retiree healthcare expenses.

Ford restructured payments into the VEBA, including the option to contribute about half in company stock, to conserve cash. But the plan to make payments in stock requires shareholder approval at Ford's annual meeting this week.

Ford, which posted a net loss of $1.43 billion in the first quarter, has said it believes it has adequate liquidity to operate through the economic downturn without seeking emergency US government loans.


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