Ford offering 300M shares in public offering to help fund health care

NEW YORK -- Ford, the only U.S. automaker that has not accepted government aid, said it will use the proceeds of the offering to pay for "general corporate purposes," including funding its Voluntary Employee Beneficiary Association, or VEBA, with cash instead of stock.

Dearborn, Mich.-based Ford owes $6.3 billion to its VEBA by the end of this year. In March, United Auto Workers members approved a new contract that, besides freezing wages and cutting benefits, allows Ford to use stock to make payments to the retiree health care trust.

At Ford's closing price of $6.08 per share on Monday, the offering would net the company $1.82 billion. However, the announcement sent shares of Ford sliding in after-hours trading. The stock lost 29 cents, or 4.9%, to $5.78 after the closing bell.

Shares of Ford have enjoyed a strong rally in recent months, with some investors saying it is well-positioned to recover once the vehicle market improves. The company has also been picking up market share amid deeper problems at its crosstown competitors, Chrysler and General Motors.

Chrysler filed for bankruptcy protection earlier this month, while GM is working to restructure out of court but may also face bankruptcy. The companies have received billions in government loans, which Ford has not asked for.

Sales at Ford are down 40% for the first four months of the year. Industrywide sales are off 37% during the same period.

As part of the offering announced Monday, Ford is granting the underwriters a 30-day option to purchase up to 45 million additional shares. Citi, Goldman Sachs, JPMorgan and Morgan Stanley are the offering's joint book-running managers.