Ford offers 300 million common stock shares to raise cash

12 May 2009

Ford Motor Co, said that it would issue 300 million shares of common stock in a public offering of which a part would used for a union-run medical trust. The move is being seen as a bid to bolster its cash to stay off US aid

Chief executive officer Alan Mulally is capitalising on shares that have tripled since 4 March, when the second largest US automaker announced a plan to cut debt by $9.9 billion. Meanwhile General Motors has lost 35 per cent of its market value over the same period.

According to analysts Mullaly is stressing the point that the company is the best in the field right now but it knows that it can do better.

This is the first time Ford has offered stock directly to the public following its listing as Ford Foundation on the New York Stock Exchange in 1956. The company's philanthropic affiliate then sold its stock in a private transaction.

The company ended March with $21.3 billion in cash from automotive operations; last year it lost a record $14.7 billion. The troubled automaker consumed $3.7 billion in cash in the first quarter. Mulally does not expect Ford to break even until 2011.

Balance-Sheet Boost
The move which will add cash to the balance sheet is aimed at forestalling a need for a government rescue even if US auto sales remain low say analysts.
GM is being propped up with $15.4 billion in low-cost loans while Chrysler LLC is in bankruptcy.