Ford Motor (F) Prices 300M Shares at $4.75
Down)
Ford Motor Company (NYSE: F) sold 300 million shares of its common stock in a public offering at a price of $4.75 per share for total gross proceeds of approximately $1.4 billion.
Shares of Ford closed at $5.01 yesterday and was $6.08 before the offering was announced Monday evening.
Net proceeds to Ford from the offering are expected to be used for general corporate purposes, including to fund with cash, instead of stock, a portion of the payments the company is required to make to the Voluntary Employee Beneficiary Association (VEBA) retiree health care trust with the United Auto Workers.
Under the previously announced agreement in principle with the UAW, Ford has the option to settle up to 50 percent of its obligations to the VEBA in shares of Ford common stock. That includes three separate payments of $610 million due in December 2009, June 2010 and June 2011.
If Ford were to elect to settle those obligations by issuing stock to the VEBA, the number of shares Ford would have to issue would be calculated at the following share prices: December 2009: $2.00; June 2010: $2.10; and June 2011: $2.20. By accessing the equity market now and potentially using the proceeds to pay those VEBA obligations in cash, Ford is not only strengthening its balance sheet, but also significantly reducing the potential future dilutive impact of the UAW agreement.
Shares of Ford closed at $5.01 yesterday and was $6.08 before the offering was announced Monday evening.
Net proceeds to Ford from the offering are expected to be used for general corporate purposes, including to fund with cash, instead of stock, a portion of the payments the company is required to make to the Voluntary Employee Beneficiary Association (VEBA) retiree health care trust with the United Auto Workers.
Under the previously announced agreement in principle with the UAW, Ford has the option to settle up to 50 percent of its obligations to the VEBA in shares of Ford common stock. That includes three separate payments of $610 million due in December 2009, June 2010 and June 2011.
If Ford were to elect to settle those obligations by issuing stock to the VEBA, the number of shares Ford would have to issue would be calculated at the following share prices: December 2009: $2.00; June 2010: $2.10; and June 2011: $2.20. By accessing the equity market now and potentially using the proceeds to pay those VEBA obligations in cash, Ford is not only strengthening its balance sheet, but also significantly reducing the potential future dilutive impact of the UAW agreement.
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