Ford Readies New Stock Offering
May 12, 2009
By Bill Visnic
In a move signaling Ford Motor Co. is seeking new liquidity -- and further positioning itself apart from its Detroit competitors -- the company announced late Monday a new public offering of 300 million shares of common stock.
Ford made a point to say it will use some of the proceeds to pay cash into the United Auto Workers union retiree health-benefits fund, rather than the stock General Motors Corp. and Chrysler hope to use as the lion's share of their payments to the fund.
"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," Ford said in a statement.
Major banks and investment firms Citi, Goldman, Sachs & Co., J.P. Morgan and Morgan Stanley are acting as joint book-running managers of the offering, Ford said, adding that the company also expects to grant the underwriters a 30-day option to purchase up to 45 million shares of common stock.
"We continue to make strong progress on our transformation plan -- gaining retail market share with great new products, improving quality, reducing costs and positioning Ford for a return to profitability," said Ford President and CEO Alan Mulally. "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."
Depending on the price, the stock sale could bring between $1.5 billion and $2 billion to Ford's coffers. The company may be wise to issue the offering now, as its shares are trading at several times a low reached in March.
The stock price is to be set after the close of the market today.
Posted by Bill Visnic at 6:15 AM under Business , Ford , News | Comments (3) | digg this | Seed Newsvine
It will be interesting to see how this ultimately prices in the market today.
Posted by: sylvia | May 12, 2009 at 1:38 PM
I think Alan ("ABSOLUTELY!") Mulally will be recorded in history as one of, if not the greatest twenty-first century industrialists.
Having stayed the course leading their One Ford plan without serious missteps through economy is truly remarkable, especially considering they are getting it done without TARP funds.
I applaud them, too, for funding their VEBA obligations with cash, rather than IOUs.
Posted by: fulcrumb | May 12, 2009 at 5:22 PM
A lot of good luck involved (as with everything). Out of desperation Ford leveraged everything, even the blue oval trademark, due to it's declining fortunes at the time. Then the economic collapse and no one could borrow money, but Ford already locked in its loans.
Just like Toyota's success with the Lexus RX crossover - the only reason they came out with it was because they did not have a proper truck based platform for a true SUV.
It sure is better when Luck is on our side vs working against us
Posted by: uponfurtherrev | May 13, 2009 at 11:15 AM