Ford offers 300 million common stocks for sale

May 11, 2009 – 6:17 pm – No Comment

In an attempt to raise capital, Ford announced today its plan to offer 300 million shares of common stock. The sale of the stocks would be used partly to pay off Ford’s healthcare obligations to the United Auto Workers union as per the terms of a recent deal with the union.

If the stocks were to sell at the closing price from today of $5.80 a share, the sale would raise $1.7 billion in capital for Ford. Citigroup, Goldman Sachs, JPMorgan and Morgan Stanley are the underwriters currently for Ford stocks and will all be offered a 30 day option to procure up to 45 million shares of the common stock being offered.

Since Ford is the only U.S. automaker that hasn’t gotten government aid, or even asked for it at this point, its attempt to raise capital by offering a large common stock sale. Ford is also the only one of the Big 3 not looking at bankruptcy or having already filed for bankruptcy. As a result of all the good things coming out of Ford, the stock price for the company has increased from $1.50 on February 20, 2009 to what it was today at $5.80.

Even though the company had an operating loss of over $1.4 billion in the first quarter, representatives from the company have said that they think Ford has the liquidity to stay afloat through the recession, without any help from the United States government.

Ford has done such a fine job in my opinion in the past few months. It has not followed the same path of GM and Chrysler to stay the only automaker to not file for bankruptcy or government aid (or both in Chrysler’s case). As a result, Ford has been able to keep the heads of the company and has, to date, laid off fewer people than its competitors. However, it has still had to work with the United Auto
Workers union to help make some concessions regarding pay and compensation packages.

I have often said it in the past and think the same could be said here, I am likely to never purchase another U.S. made automobile, but if I did a Ford is the most likely choice (and quickly becoming the only choice it seems). I actually just had a friend purchase her first car and she bought a used convertible Mustang from a Ford dealership. After riding around in the car this weekend, I was slightly impressed. There was a little to be desired when it came to leg room in the backseat (haha) but overall, it seemed well built and fairly powerful. At the same time, I still love my Scion. I don’t think I would trade in my car for a Ford any time soon, but I would consider it before I even thought about another GM.