Ford takes on $7 billion debt for health care trust
All told, the transactions add about $7 billion in debt to Ford's balance sheets.
The asset transfer included a $1.4 billion scheduled payment on a $6.7 billion note and a prepayment of $500 million on that note, Ford said in a release today.
Additionally, Ford paid $610 million in cash on a separate $6.5 billion note and transferred $620 million from a temporary asset account set up previously to fund the new voluntary employees' beneficiary association.
The automaker also transferred warrants to purchase 362 million shares of Ford common stock at a price of $9.20 to the VEBA.
With Ford shares closing at $10.28 today, those warrants are in-the-money and the UAW fund could opt to exercise the warrant at any time, Ford spokesman Mark Truby said.
The last element of the asset transfer was a $3.5 billion internal VEBA fund that Ford had accumulated over the years.
“The transfer of these health care liabilities to the VEBA trust is the culmination of several years of work and will significantly improve our competitiveness in the U.S.,” Ford CFO Lewis Booth said in a statement.
Early last year, the UAW negotiated the VEBA terms to provide Ford, General Motors Co. and Chrysler Group with relief from their health care obligations to retired UAW hourly workers. The car companies were in the throes of a cash crisis caused by the deepest recession in car sales in the past 30 years.
The union took an even bigger haircut on the payments last spring than when the permanent VEBAs with the Detroit 3 were negotiated as part of the 2007 master contract talks.
Reuters contributed to this report
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