UAW Retiree Medical Benefit Trust, Ann Arbor, Mich., could receive at least $1.26 billion in proceeds if it succeeds in its secondary public offering today to sell all of the 362 million warrants it holds in Ford Motor Co.
The auction is taking place today with a requirement of $3.50 per warrant as the minimum bid for 1,000 warrants, according to a Ford statement. The auction will conclude at 6:30 p.m. EDT today.
The warrants, each representing the right to purchase a share of Ford's stock at $9.20, could give the $44.4 billion United Auto Workers Voluntary Employees Beneficiary Association fund a major cash infusion.
The stock traded at $13.35 a share in late afternoon trading today.
The VEBA will receive all the net proceeds of the offering, expected to be priced through a modified Dutch auction, selecting the highest price at which all the warrants can be sold.
The warrants were contributed by Ford to the UAW VEBA on Dec. 31, in addition to $15 billion the company contributed in a combination of $13.2 billion in Ford notes and $1.8 billion in a portfolio of diversified investments. The UAW VEBA had not placed an estimated value on the warrants, Eric Henry, chief investment officer of the UAW VEBA, told Pensions & Investments in February. The contribution payments ended Ford's obligations to fund retiree medical benefits for its UAW-represented employees under a 2008 settlement agreement between the automaker and the UAW.
Ford contractually agreed to register the warrants and commence the offering whenever the UAW VEBA decided to sell them.
Mr. Henry in February said that Independent Fiduciary Services, hired by the UAW VEBA, would make any decision on selling Ford securities, including the warrants. Mr. Henry and Samuel W. “Skip” Halpern, IFS president, couldn't be reached for comment by press time.
Deutsche Bank Securities is managing the offering, whose underwriting syndicate includes Goldman Sachs, Barclays Capital, Bank of America Merrill Lynch, Citigroup, J.P. Morgan Securities, Morgan Stanley and RBS Securities.