FoMoCo is probably the most respected of all American automakers after it decided not to ask the government for federal aid last year when all of Detroit was knocking on the doors of the White House. However, shares of the Dearborn automaker closed at $9.88 on Tuesday, the lowest since Dec. 21, 2009.
Why? Analyst suggest investors are concerned about sluggish industry sales and uncertainty over how the company will pay the UAW’s health care trust fund.
Of the $860 million it owes to the UAW’s Retiree Medical Benefits Trust, Ford must pay the first $250 million in cash but can pay the remaining $610 million in either cash or by issuing stock. However, if FoMoCo issues more stock, it will dilute the value of its shares.
Ford didn’t comment on how it plans to pay the UAW health care trust fund.
– By: Stephen Calogera
Source: Free Press