• May 12th 2009 at 8:01AM
  • 18

Right now, cash is king in the automotive world, and Ford Motor Company is looking to raise some serious greenbacks with 300 million shares of common stock. The money will be used to fund automotive operations, with a portion of the payments Ford is required to make to the Voluntary Employee Beneficiary Association (VEBA) retiree health care fund with the UAW.

At the close of trading on Monday, Ford stock was worth $6.08 per share, and the stock sale should net somewhere close to $1.8 billion, depending on future share fluctuations. That's low by historic standards, but nearly five times what it was worth in November, when the size and scope of the recession and automotive slump was being realized. Since that time, Ford has emerged as the one Detroit automaker that didn't need government funding. The Blue Oval has also increased market share in six of the past seven months, something the Dearborn, MI-based automaker hasn't done in years. The common share sale will be handled jointly by Citi, Goldman, Sachs & Co., J.P. Morgan and Morgan Stanley. Hit the jump to pour over Ford's press release.

[Source: Ford | Image Source: Bill Pugliano/Getty]



DEARBORN, Mich., May 11, 2009 – Ford Motor Company (NYSE: F) announced today a registered public offering of 300 million shares of its common stock at a par value of $0.01 per share. Ford said it also expects to grant to the underwriters a 30-day option to purchase up to 45 million shares of common stock.

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 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."

Citi, Goldman, Sachs & Co., J.P. Morgan and Morgan Stanley are acting as joint book-running managers of the offering.

Ford has filed a registration statement – including a prospectus – with the 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 calling Citi at (800) 831-9146; Goldman, Sachs & Co. at (212) 902-1171 or (866) 471-2526; J.P. Morgan Securities Inc. at (718) 242-8002; or Morgan Stanley & Co. Incorporated at (866) 718-1649.

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    • 1 Second Ago
      • 6 Years Ago
      I like how you guys are talking stocks like you guys have your series 7. I don't come here to let everyone how much I do know about stocks, bonds, and commodities but I do come here to play armchair auto-exec and pretend I know how to run any multi-billion dollar automaker like a genius. Hahaha

      I am just impressed that Ford remembered that there are conventional ways of raising money.
        • 6 Years Ago
        True that. I guess Ford would be better off just having the government print off some of those billion dollar bills with Obama's face on the front. It just shows that no matter what Ford does there will always be a group ready to dump on it. Same for other automakers as well.
      • 6 Years Ago
      This sure underscores Ford's indication that they see value in being seen as not taking government aid. It seems they'd rather put their shareholders through a 15% dilution instead.

      When you're losing $6B a quarter (over $12B in cash lost last quarter!), it's kinda hard to understand what good raising $1.8B is.

      I know Ford has by far made the smartest financial moves of the big 3 in the last 2-3 years, but this one seems like too small a move to significantly increase their changes of avoiding a bailout/bankruptcy.
      • 6 Years Ago
      We now know why Ford's stock has gone up 600% since the bottom. Short sellers have bought up shares knowing Ford would have to offer a huge ammount of new common shares to raise money.

      Your stock price does not go up when you release 300 million new shares unless you are poised to show incredible growth. Ford will be lucky to sell half the cars they did last year. They are still on track to lose billions next quarter.

      • 6 Years Ago
      Anyone who buys Ford stock, understands that the family has their own "B" class shares. It they don't, they are an idiot.

      Yes, this dilutes the potential dividend of the common shareholders. However, they also understand this............. if they buy. The fact that people will buy Ford stocks, shows that they have faith in the company, and the direction they are headed.

      In other words, they won't just buy, because they really want to just give their money to Ford.

      That said, the only reason that Ford has not been subject to a hostile takeover, is because of the family shares. This is also part of the reason that Ford will do almost anything they have to do, to avoid BK, or being on the government dole. A family "owned" business, is a good thing.

      After Ford is profitable, I think you see a reverse stock split. It would only make sense. But, feel free to continue to bash a company that is making it "the American way."
      • 6 Years Ago
      @ Block

      But isn't the effect on EPS per share the same?
        • 6 Years Ago
        So who is in the right me or Not You?
        • 6 Years Ago
        "You can't issue new common stock without diluting existing shareholders."

        Again, you are both are mixing terminologies to suit your point - Sea Urchin originally said "investors will lose value because their shares will be diluted" now you're saying it's "diluting existing shareholder" (whatever that means).

        EPS is a tool used to evaluate stock value; it doesn't set or change it. So regardless of EPS implications (which could go _up_ as a result of the additional capital, which is why this conversation is a ridiculous one) the _value_ of the existing shares is unaffected, even if EPS may (or may not!) be.

        Saluki: "This isn't a debatable topic, it's like arguing whether the earth is round.""
        Correct, see my point above.

        Sea Urchin: "So who is in the right me or Not You?"
        Take your pick.

        • 6 Years Ago
        me or notYou, nice conundrum.

        There may not be real cashflow difference right away for existing holders, and the new shares may sell at current prices.

        But the market, unless it is completely abolished, will adjust for it over time, and the stock price for the larger pool of stocks will be adjusted to reflect company performance.

        It probably won't be a pure percentage dilution, just by counting the number of shares. If Ford does well, it won't dilute as much, as people will share equity in a stronger company. If Ford tanks under union/competition pressure, or suffers due to supplier or government/competition pressure issues, the dilution will be more severe, as more people share in a weaker company over time.

        But it will dilute, it is the laws of mathematics. You can't divide one thing by two different numbers, and get the same result.
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