Ford stock warrant sale funds retired auto workers' health trust
NEWS IN BRIEF — Posted April 12, 2010
The trust set up to pay for retired auto workers' health expenses was expected to net about $1.8 billion from an auction of stock warrants for Ford Motor Co.
The auction, which opened March 30, allowed investors to pay $5 per warrant for the right to buy Ford stock at some point in the future for $9.20 per share -- meaning the buyer would pay $14.20 per share total. The warrant buyers could purchase stock at that price anytime until Jan. 1, 2013, according to the company's filing with the Securities and Exchange Commission.
Ford's stock was trading at $13.28 per share March 30, so the people who bought warrants were essentially betting that the price would go up, and they would make money by buying and reselling the stock.
The Voluntary Employee Beneficiary Assn., or VEBA, set up to cover future health care costs for retired union autoworkers, will receive the proceeds.
Note: This item originally appeared at http://www.ama-assn.org/amednews/2010/04/12/bibf0412.htm.