UAW VEBA to sell warrants for Ford stock

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Ford Announces Secondary Public Offering by UAW VEBA of Warrants To Purchase Common Stock

DEARBORN, Mich., March 29 /PRNewswire-FirstCall/ -- Ford Motor Company (NYSE: F) announced today that the UAW Retiree Medical Benefits Trust (the "UAW VEBA") has commenced a secondary public offering of up to 362,391,305 warrants, each of which represents the right to purchase one share of Ford's common stock at an exercise price of $9.20 per share, subject to customary anti-dilution adjustments.

As previously announced, the UAW VEBA acquired the warrants from Ford on Dec. 31, 2009 as part of the consideration Ford paid pursuant to a settlement agreement under which the UAW VEBA assumed the obligation to provide retiree health care benefits to eligible active and retired UAW Ford hourly employees and their eligible spouses, surviving spouses and dependents. The warrants expire on Jan. 1, 2013.

Ford will not receive any proceeds from the offering. The UAW VEBA is offering to sell all of the warrants that it holds. The UAW VEBA will receive all of the net proceeds from the offering.

The offering is expected to price through a modified Dutch auction. Deutsche Bank Securities Inc. is the sole book-running manager for the offering. Goldman, Sachs & Co., Barclays Capital Inc., BofA Merrill Lynch, Citi, J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated and RBS Securities Inc. are included in the underwriting syndicate.

Deutsche Bank Securities, Inc., in its capacity as auction agent, has specified that the auction will commence at 8 a.m. EDT on March 30, 2010, and will close at 6:30 p.m. EDT on that same day. During the auction period, potential bidders will be able to place bids at any price (in increments of $0.10) at or above the minimum bid price of $3.50 per warrant. The minimum size for any bid is 1,000 warrants.

The auction procedures, the exercise price, expiration date and other terms of the warrants are described in the preliminary prospectus supplement referenced below.

The offering is being made by means of a prospectus and prospectus supplement only. Copies of the prospectus and the prospectus supplement may be obtained from Deutsche Bank Securities Inc., Prospectus Department, Harborside Financial Center, 100 Plaza One, Jersey City, N.J. 07311-3988, telephone: [phone] or by emailing [e-mail].

Ford has filed a registration statement – including a prospectus – with the Securities and Exchange Commission ("SEC") for the offering to which this communication relates. Before investing, investors should read the prospectus in that registration statement and other documents Ford has filed with the SEC for more complete information about Ford and this offering.

Investors may obtain these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send the prospectus and the prospectus supplement upon request by contacting Deutsche Bank Securities Inc., Prospectus Department.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Ford Motor Company

Ford Motor Company, a global automotive industry leader based in Dearborn, Mich., manufactures or distributes automobiles across six continents. With about 198,000 employees and about 90 plants worldwide, the company's automotive brands include Ford, Lincoln, Mercury and Volvo. The company provides financial services through Ford Motor Credit Company.


SOURCE Ford Motor Company

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Last Updated: March 30. 2010 1:00AM .
UAW to sell warrants for Ford stock
Warrant offering may raise $1.3B for retiree health care trust fund
Bryce G. Hoffman / The Detroit News
Detroit -- The United Auto Workers union plans to offer for sale all of its 362 million warrants for Ford Motor Co. stock today -- a move that could generate about $1.3 billion for the union's retiree health care trust fund.

The stock warrants constitute an 11 percent ownership in Ford.

Ford issued the warrants to the union in December to help cover its obligation to the Voluntary Employees' Beneficiary Association. The VEBA assumed responsibility for hourly retirees' health care, taking that costly obligation -- $13.6 billion over the lives of all 200,000 retirees and spouses -- off the automaker's books.



The VEBA began paying Ford retiree health care costs in January.

Labor expert Gary N. Chaison, a professor of industrial relations at Clark University in Massachusetts, said the union's decision to sell its Ford stock warrants shows "a degree of sophistication in handling a difficult financial situation" that goes beyond its traditional collective bargaining role.

It also is another sign, Chaison said, that Ford's business turnaround is gaining traction.

"Ford is doing a lot better than most expected it would," he said. "The VEBA was a gamble in the first place. It was a concession. (UAW officials) were assuming financial risk. The VEBA could have been a disaster."

In February, Ford valued the warrants at $1.2 billion. As a result of Ford's increased stock price, however, the sale is expected to generate more than that.

The trust set a minimum price per warrant at $3.50. Each warrant gives the holder the right to buy a Ford share at $9.20. At the minimum price, the trust would get $1.3 billion, $100 million more than the value Ford placed on the warrants in December.

Ford stock closed Monday at $13.57, down $0.29.

Ford will receive no proceeds from the transaction, nor will the UAW's gains reduce the automaker's remaining obligations, about $7 billion, to the VEBA.

Ford has funneled $2.5 billion to the VEBA, which already had $3.5 billion, mainly from previous trusts set up by Ford.

According to documents filed with the U.S. Securities and Exchange Commission, the offering will be run by Deutsche Bank Securities Inc. starting at 8 a.m.

The UAW and Ford had no further comment Monday on the stock warrant sale.

Analyst Himanshu Patel of JPMorgan said it could signal that Ford's stock has peaked, for now.

"While the warrant auction is a UAW-driven -- not Ford-driven -- decision, it is not lost upon us that it is a decision made by an organization that has both a better inside view than most on Ford's operations and that is advised by professional external financial advisers," Patel said.

"We would argue the UAW warrant auction signals the stock is fully valued."

He said the move also raises the possibility that Ford could issue additional equity to take advantage of the high stock price.

General Motors Co. and Chrysler Group LLC also turned to VEBA coverage -- for about 700,000 GM retirees and 120,000 Chrysler retirees.

The VEBA arrangement gave the union an ownership stake in the automakers, and protection for retirees' coverage, in exchange for removing billions in retiree health care costs from the companies' books.

Ford moves to trim debt
Also Monday, Ford declared its intention to make an early $3 billion payment -- almost half of the $6.7 billion it owes -- on a revolving credit note due in 2013 as it tries to trim its debt and strengthen its balance sheet.

The move was detailed in a filing with the U.S. Securities and Exchange Commission. The April 6 payment will cut Ford's total debt to just under $32 billion and reduce its interest expenses.

Ford has said the company is saddled with too much debt, putting it at a competitive disadvantage with GM and Chrysler, which erased much of their debt in bankruptcy reorganizations last year.

Ford was the only U.S. automaker that did not file for bankruptcy, and the only one to pass on a taxpayer bailout.