United Auto Workers Selling $1.3 Billion in Ford Stock
03-31-10, 03:30 PM
#1
United Auto Workers Selling $1.3 Billion in Ford Stock
United Auto Workers Selling $1.3 Billion in Ford Stock
(NYSE: F)
March 30th, 2010 • Related • Filed Under • by admin
Filed Under: Business News
Ford Motor Co’s (NYSE: F) stock has climbed to a new five year high and the United Auto Workers’ trust fund is selling its 11% ownership stake in the Detroit-based automotive company to prop up its retiree health care plan.
More than 200,000 retired Ford employees and their spouses depend on the UAW’s trust fund to provide for their health care coverage. The fund could have waited to see if Ford’s stock price will continue to go up and see even greater highs, but some analyst believe that it’s too much of a risk for the fund to take.
Despite the expected $1.3 billion cash infusion from the sale of the stock, some believe that the trust fund is in danger out of money. The union-operated trust began paying for healthcare costs for retired Ford workers and their spouses and January after the company transferred cash and other assets valued at $14.8 billion.
The fund is now cashing in the first of those assets, warrants to buy 362 million shares of Ford Stock, starting on Tuesday.
Ford’ stock price dropped 2% in trading to $13.57 on Monday afternoon. Despite the small loss, Ford’s stock is still ten times its recent low of $1.26 per share in November 2008. On March 18th, Ford’s shares hit an intraday price of $14.54, the highest share price since January 2005.
Shelly Lombard, credit analyst at the New York bond research firm GimmeCredit, said the trust is wise to sell the warrants now to the Associated Press.
“It just makes perfect financial sense to take some money off the table,” she said. “You never know what the market’s going to do.” Lombard noted that the timing of the sale is good because Toyota, one of ford’s chief rivals is struggling.
Ford, GM and Chrysler setup retiree health care trusts as part of their labor negotiations in 2007. The automakers wanted to build the trust to be able to remove future retiree health care liabilities from their books and the UAW supported the option because it would allow automotive retirees to continue to receive health care benefits if the companies filed for bankruptcy.
(NYSE: F)
March 30th, 2010 • Related • Filed Under • by admin
Filed Under: Business News
Ford Motor Co’s (NYSE: F) stock has climbed to a new five year high and the United Auto Workers’ trust fund is selling its 11% ownership stake in the Detroit-based automotive company to prop up its retiree health care plan.
More than 200,000 retired Ford employees and their spouses depend on the UAW’s trust fund to provide for their health care coverage. The fund could have waited to see if Ford’s stock price will continue to go up and see even greater highs, but some analyst believe that it’s too much of a risk for the fund to take.
Despite the expected $1.3 billion cash infusion from the sale of the stock, some believe that the trust fund is in danger out of money. The union-operated trust began paying for healthcare costs for retired Ford workers and their spouses and January after the company transferred cash and other assets valued at $14.8 billion.
The fund is now cashing in the first of those assets, warrants to buy 362 million shares of Ford Stock, starting on Tuesday.
Ford’ stock price dropped 2% in trading to $13.57 on Monday afternoon. Despite the small loss, Ford’s stock is still ten times its recent low of $1.26 per share in November 2008. On March 18th, Ford’s shares hit an intraday price of $14.54, the highest share price since January 2005.
Shelly Lombard, credit analyst at the New York bond research firm GimmeCredit, said the trust is wise to sell the warrants now to the Associated Press.
“It just makes perfect financial sense to take some money off the table,” she said. “You never know what the market’s going to do.” Lombard noted that the timing of the sale is good because Toyota, one of ford’s chief rivals is struggling.
Ford, GM and Chrysler setup retiree health care trusts as part of their labor negotiations in 2007. The automakers wanted to build the trust to be able to remove future retiree health care liabilities from their books and the UAW supported the option because it would allow automotive retirees to continue to receive health care benefits if the companies filed for bankruptcy.
03-31-10, 08:55 PM
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