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Ford Raises $1.4B Through Common Stock Offering

Ford Motor Company agreed to sell 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. Ford also granted to the underwriters a 30-day option to purchase up to 45 million additional shares of common stock to cover over-allotments.

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.

We are pleased with this equity offering, which is another key step in our plan to transform Ford into an exciting, viable enterprise poised to return to profitability. By issuing equity now and potentially funding a larger portion of our future VEBA obligations with cash, we are able to further improve our balance sheet and significantly reduce the potential dilutive impact of the VEBA obligations on existing shareholders.

—Alan Mulally, Ford president and CEO

Under the previously announced agreement in principle with the UAW, Ford has the option to settle up to 50% 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.

Citi, Goldman, Sachs & Co., J.P. Morgan, Morgan Stanley, Deutsche Bank Securities Inc. and Merrill Lynch & Co. are acting as joint book-running managers of the offering.



It seems like the Ford CEO is making a lot of the right financial moves. There could be a business consensus that since Chrysler and GM are going bankrupt, there will be more market share for Ford.


Hold everything! I thought there was an economic crisis?? And Ford Motor Company... and American half-dead behemoth automaker can raise $1.1 BILLION in a public offering?

What gives? Maybe all those financial tales are... just tales (like AGW.) See the pattern?


Ford was selling at $2 just a few months ago, then they converted almost $10 billion in debt to equity. They have convinced investors that they will be the last company standing by getting themselves into a "bet the farm" debt years ago. Now they are digging out based on the other car makers demise. It seems they picked the right time to bet everything years ago...mostly luck and necessity.

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