P&A Providers & Administrators
MenuMENU
SearchSEARCH

Ford May Signal Weakness Funding Retiree Health Care with Stock

June 29, 2010
2 min to read


Ford Motor Co. may make part of its required $859 million payment to a union health-care fund this week in stock, a sign of potential weakness in the shares as the U.S. auto sales recovery stalls, Bloomberg reported.


Ford must pay the United Auto Workers Retiree Medical Benefits Trust by June 30 to fund benefits for former hourly workers. Ford has the option to pay as much as $610 million in stock under an agreement reached with the union last year, and the second-largest U.S. automaker may choose shares in order to conserve cash, said Brian Johnson, a Barclays Capital analyst.

Ad Loading...


If Ford issues stock to pay the fund, investors may see it as a sign the company considers its shares overvalued in a sales environment that the head of its Americas unit described as “flat-lined.”


“Investors look at this as an indication of whether management sees their stock as cheap or expensive,” said Chicago-based Johnson, who has a neutral rating on Ford common shares. “If it’s cheap, they use cash. If it’s expensive, they’ll use stock.”


John Stoll, a Ford spokesman, declined to comment on how the automaker will pay the trust.


“We’ll meet our obligation,” Stoll said in an interview. “We’re not in a position to talk about an amount or how exactly we’ll pay for it.”


Ford used cash for its first payment of $610 million in December and pre-paid an additional $500 million with its shares in the midst of a fourfold annual gain. The company said at the time that it paid in cash because the stock’s volume-weighted average share price in the period before the payment, which determines the price of the stock it issues to the trust, was $9.13, less than the $10 the stock closed at on Dec. 31.

Ad Loading...


The stock closed June 25 at $10.75, a 6.2 percent discount to the average of about $11.46 in the previous 30 trading days. The company has 3.34 billion shares outstanding.


The shares fell 32 cents, or 3 percent, to $10.43 at 4:15 p.m. in composite trading on the New York Stock Exchange.


“I see this going equity because of the 30-day share price and the number of new shares would only represent 1.5 percent of total shares in circulation,” said Kristin Dziczek, director of the labor and industry group at the Center for Automotive Research in Ann Arbor, Michigan. “That’s not a whole lot of dilution.”


Ford should pay in cash as it did last time, said Bernie McGinn, president of McGinn Investment Management, which owns 320,000 Ford shares.



More Industry

Subwoofer in trunk of car.
Industryby Lauren LawrenceMay 26, 2026

Ownership Priorities are Shifting

A new survey shows that in the U.S. vehicle quality for generation Z is largely defined by advanced safety features, intuitive technology and premium sound systems.

Read More →
Man's hand holding gas pump in fuel tank of white car
Industryby Hannah MitchellMay 26, 2026

Pump Price Jump Calculated

ISeeCars.com examined fuel costs for different power trains, finding which ones have experienced the biggest hits since the war in Iran commenced.

Read More →
Graphic showing previous week's truck and SUV segment prices
Industryby StaffMay 20, 2026

Black Book: Weekly Market Update

Wholesale values fell last week despite the spring season still being in the traditional full-gear mode, analysts said.

Read More →
Ad Loading...
Photo of dealership sign with Toyota logo
Industryby Lauren LawrenceMay 19, 2026

Arkansas Auto Group Acquires First Indiana Rooftop

Performance Brokerage Services represented both the buyer and seller in the sale of Carver Toyota of Columbus by Carlock Automotive Group.

Read More →
Headshot photo of Antonio Filosa, Stellantis CEO
Industryby Hannah MitchellMay 19, 2026

Stellantis to Dive Into U.S. Lending

The multinational maker of Chrysler, Dodge, Jeep, Ram and multiple other brands received conditional approvals for a Utah-based industrial bank.

Read More →
Photo of the rear of a new BMW iX SUV
Industryby Hannah MitchellMay 12, 2026

New-Vehicle Prices Rise

With April sales down, higher prices on in-demand large vehicles helped inflate the overall ATP, though increases were under long-term averages, Cox Automotive reported.

Read More →
Ad Loading...
Graphic of car segments' results the previous week
Industryby StaffMay 12, 2026

Black Book: Weekly Market Update

Last week in the wholesale automotive market proved to be a mixed bag, analysts reported.

Read More →
Graphic of last week's estimated used retail days to turn
Industryby StaffMay 6, 2026

Black Book: Weekly Market Update

Conversion rates were flat last week at 63%, Black Book analysts calculated, as low-mileage and almost-near units outpaced the overall market.

Read More →
cargo ship with vehicles, at dock
Industryby Lauren LawrenceMay 5, 2026

EU Auto Association Urges Action

Trade relations between the European Union and the U.S. are at risk, causing the European Automobile Manufacturers Association to push lawmakers to make a decision.

Read More →
Ad Loading...
two people working on a paper contract together
IndustryMay 1, 2026

Driving into the Super CFC Era

Understanding the risks and benefits of retail accounting and Super CFCs can help you better present options to your dealer partners.

Read More →