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Ford Announces Public Offering of another 300 Million Shares of Common Stock

The company is watering the shares in an attempt to raise badly needed cash due to declining sales and market share.

by on May.11, 2009

Read the fine print carefully before buying any of the offered shares.

Read the fine print carefully before buying any of the newly offered Ford Motor Company shares.

Ford Motor Company (NYSE: F) announced late today a 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. It clearly is trying to cash in on the well publicized troubles of Chrysler and GM, although its own financial health is on life support.

Ford lost $1.4 billion in the first quarter and decreased its cash from $28.7 billion in the first quarter of 2008 to $21.3 billion in cash for Q1 2009. In 2008 it lost a record $14.7 billion. The offering, depending on final price, could raise $1.8 billion in cash.

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 union, which was agreed to earlier this year. The company also has a proposal pending at the annual meeting later this week for approval to issue 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. 

In total 3,147,397,653 common shares will be outstanding, if the underwriters’ option to purchase additional shares is exercised in full. There will also be 71 million shares of Class B stock. Each outstanding share of common stock is entitled to one vote on all matters submitted to a vote of shareholders. Each holder of Class B, which is held by members of the Ford family, have 40% of the general voting power, as long as at least approximately 60.7 million shares of Class B stock remain outstanding. This means a share of B has 22 votes compared with one vote for one share of common.

This effectively guarantees that control of the company resides with the Ford family, and is one of the primary reasons the company did not seek loan guarantees from the U.S. government since family control could have been lost in a restructuring.  Instead, Ford mortgaged the company before the global financial crisis hit.

Subscribe to TheDetroitBureau.com“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.”

Ford’s actual total market share has declined in 2009.  (more…)

High Noon as President Obama Shoots Down Hedge Funds and Speculators

President shoots to kill and explains where he stands on reviving the U.S. auto industry.

by on Apr.30, 2009

As to they implications of this shoot out on recalcitrant GM bondholders, well, I'll bet the President has already reloaded.

As to the implications of this shoot out on recalcitrant GM bondholders, well, I'll bet the President has already reloaded.

At eight minutes past noon today the President of the United States strode into the Grand Foyer of the White House to speak on the Chrysler restructuring.

It may as well have been the OK Corral by the time the President got done shooting down the outlaws that were holding up the restructuring of the wounded, but still breathing Chrysler Corporation.

He began simply enough by saying that his team would continue working with General Motors as its May 30 deadline approached, but quickly moved to the show down at hand.

“And today, after consulting with my Auto Task Force, I can report that the necessary steps have been taken to give one of America’s most storied automakers, Chrysler, a new lease on life,” he said.

“This is a company that has a particular claim on our American identity… Chrysler has not only been an icon of America’s auto industry and a source of pride for generations of American workers; it’s been responsible for helping build our middle class, giving countless Americans the chance to provide for their families, sending their kids to college, saving for a secure retirement.  It’s what hundreds of thousands of autoworkers and suppliers and dealers and their families rely on to pay their bills in communities across our industrial Midwest and across our country.” (more…)

Congressman Warns Wall Street Firms to Stop Obstructing Auto Viability Plans

Reckless banks hold key to automaker's survival.

by on Apr.02, 2009

"These banks hold the key to Chrysler's survival," Peters said.

"These banks hold the key to Chrysler's survival."

The President’s restructuring of General Motors Corporation and Chrysler LLC just got more interesting. As executives from Chrysler and the Italian carmaker Fiat have intensified their discussion on an alliance, some of the automaker’s political allies are taking aim at the big Wall Street institutions that hold Chrysler’s debt.

In a sharply worded letter to the top executives,  Representative Gary Peters (D-Michigan) is warning four of the nation’s major financial institutions, JP Morgan, Citigroup, Goldman Sachs and Morgan Stanley, not to block Chrysler’s chances for survival by trying to squeeze more money from the ailing carmaker.  Peters noted that these institutions have already received billions of dollars in taxpayer investments and that any debts they collected from Chrysler would simply be more tax dollars.

Click Here to Subscribe“These banks hold the key to Chrysler’s survival,” Peters said in his letter. “Despite taking billions in taxpayer support to keep themselves solvent, these creditors are unwilling to reach a fair deal to keep Chrysler alive and to protect hundreds of thousands of American families. The banks that hold Chrysler’s debt were provided federal support for the good of the economy, and they should negotiate in good faith with automakers for the same reason,” Peters said. (more…)