UAW trust to sell all its its Ford stock warrants

Posted March 29, 2010 at 10:44 a.m.

Associated Press | The United Auto Workers union is hoping to raise at least $1.3 billion for its retiree health care trust fund by selling all of its 362 million warrants for Ford Motor Co. stock.

The trust will auction the warrants, which were issued in December 2009 as part of contract talks with the union, starting at 8 a.m. Tuesday, Ford said Monday in a statement. The automaker and union agreed to set up the trust to help Ford remove retiree health care costs from its books while it was in financial trouble in 2007.

The trust began paying health care costs for about 200,000 retirees and their spouses nationwide on Jan. 1, and Ford said it is saving the company roughly $500 million per year. The trust set a minimum price for each warrant at $3.50. Each warrant gives the holder the right to buy a Ford share at $9.20.

The combined $12.70 that a buyer would pay for both the warrant and a share of Ford stock is 8 percent below Ford’s closing stock price on Friday of $13.86 a share.

Ford shares fell 20 cents, or 1.4 percent, to $13.66 in midday trading Monday.

Shelly Lombard, credit analyst at the New York bond research firm GimmeCredit, said the UAW trust is wise to sell the warrants now, since Ford’s stock has been on the rise.

“The economy’s improving and Toyota’s on the ropes, so the sense is that things will only go up from here,” she said. “But having said that, it just makes perfect financial sense to take some money off the table. You never know what the market’s going to do.”


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