Dearborn, Michigan-based Ford would lose its option to pay in stock if its price falls below $1 a share or if it receives an audit qualification on its viability, but in either case it would retain “the right to defer payment over five years and pay in stock,” the statement said.
Also, Ford agreed to provide the VEBA with $150 million in risk protection for any loss on shares delivered through 2011, and to issue warrants enabling the VEBA to purchase 362 million shares at $9.20 a share. Ford has 2.4 billion shares outstanding.
Under the ratified agreement, Ford will restructure its VEBA debt obligations into a $6.5 billion note payable in Ford stock or cash at the company’s option and a $6.6 billion note payable in cash, both due 2018, the Ford statement said.
The ratification is part of a joint Ford-UAW memorandum of understanding, subject to approvals by the U.S. Labor Department, the Securities and Exchange Commission and U.S. District Court in Detroit, enabling the company to end its legacy retiree health care obligation by funding a new VEBA health care trust.
The approvals are expected before the VEBA, which the UAW will control, is scheduled to begin January 1, said Ford spokesman Mark Truby.