Ford Sells 300 Million Shares to Fund UAW VEBA
“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.” Well, he would say that, wouldn’t he? And now’s as good a time as any for Ford CEO Alan Mulally to cash-in some of his employer’s chips by selling 300 million shares of common stock. Ford’s stock price has tripled—from not very much to three times not a whole lot—since Chrysler filed for Chapter 11 and GM heads for same. And Ford needs a mountain of cash to honor their contract with the United Auto Workers. While the MSM is busy repeating Ford’s “we’re the only one not suckling on the federal teat” mantra, keep in mind that the sale should raise $1.8 billion or so, and we’re talking a $15 billion total obligation the union’s VEBA health care fund. The market knows: Ford’s stock sank nine percent today on the news of the offer. Still, as we’ve said all along, there’s something to be said for being the last man standing. The question is, what? Let’s hope it’s not “our turn.”
More by Robert Farago
Comments
Join the conversation
Ford's Common Stock investors seem to have woken up this morning and realized that Ford just gave them an 11% haircut: http://finance.yahoo.com/q?s=F $5.28/share, down 13%
Oh yeah, Stan and Ollie! Now I get it...I thought that was Steve Ballmer on the left.
Mulally for president!!!
I guess Tata will be forking over $2B owing for Jag and LR so that will help too. Perhaps this little by little approach will get them through. I read an article yesterday that talked about how Ford is doomed because they won't have the benefit of shedding debt or union restructuring like GM and Chrysler. I don't drive a Ford but I like cheering for the underdog. Anyway, two thoughts on these supposed disadvantages: 1. Even though they have to restructure debt over a longer period of time, they have the benefit of uninterrupted development of their lineup and advertising so while GM and Chrysler (collectively "C11 Motors") are being reborn, Ford will continue to suck up sales like a well-oiled machine. 2. I think the union is a non-factor. Either they will agree to concessions to fall in line with what the other two have (not likely) or the unions at C11 Motors will 'readjust' themselves to match with Ford (more likely). In actual fact, it will probably be somewhere between the two. In the future all auto companies will be mindful to keep a leash on the union dog (specifically on items such as benefits and pension provisions). What I'm not sure about is dealer bloat. If C11 Motors cuts their dealer network but Ford can't do the same, that's a problem. I've read here that Ford doesn't have a huge glut of cars stuck in the network so promoting new models (Fusion, Taurus, Fiesta) will be easier. That will continue building the momentum needed to kill the cash burn and work towards shedding further debt.