Ford Motor Company (NYSE: F) announced late yesterday that it has agreed to sell 300 million shares of its common stock in a public offering at a price of $4.75 per share for total gross proceeds of about $1.4 billion. Ford also granted to the underwriters a 30-day option to purchase up to 45 million additional shares of common stock to cover over-allotments. It is unknown if investors will buy all of the new shares of common stock in the offering.
The loss-making company also has a proposal pending at the annual meeting later this week for approval to issue additional shares of common stock in a transaction or series of related transactions in amounts equal to or in excess of 20% of the number of shares of common stock outstanding. Such a large issue requires shareholder approval. But with the Ford family holding 40% of the voting rights, it is likely to be approved, as the company continues to consume cash.
The latest stock issue of 345 million shares will dilute the amount of common shares outstanding by 11%, but in trading yesterday before the shares were priced investors sold off Ford and drove the price down 18% to $5.01. The one-year range on the shares is $1.01 to $8.37.
Ford lost $1.4 billion in the first quarter, after losing a record $14.7 billion in 2008, and decreased its cash from $28.7 billion in the first quarter of 2008 to $21.3 billion in cash for Q1 2009. In the first quarter the company also consumed $3.7 billion in cash. Production, sales, and market share are all declining. (more…)