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.

According to analysts the move will certainly reduce the possibility that the company would need to go for a government bailout.

Ford has said that it would allow the underwriters a 30-day option to purchase as much as 45 million shares of common stock. The company said Citigroup Inc, Goldman, Sachs & Co, JPMorgan Chase & Co and Morgan Stanley would act as joint book-running managers of the offering.

By selling shares, Ford will fund the Voluntary Employee Beneficiary Association through cash. The Association will take on the automaker's future obligations towards United Auto Workers retirees. The shift is an important component of Ford's strategy to cut down expenses and return to profit.

''We continue to make strong progress on our transformation plan. Today's equity offering is another example of the fast, decisive action we are taking as we build momentum on our plan, including further progress on improving our balance sheet," Mullaly said in a statement.

Ford shares fell 4.6 per cent to $5.80 following the stock offering in after-market trade. At the price the offering would raise about $1.7 billion for Ford.