Ford shifts retiree health liability to UAW trust
DEARBORN, Mich. (AP) — Ford Motor Co. says it finished transferring retiree health liabilities to a union medical-benefits trust on Thursday, the last day of 2009.
The transfers, announced Monday, were part of a court-approved settlement agreement.
Chief Financial Officer Lewis Booth said moving the liabilities to the UAW Retiree Medical Benefits Trust would improve the car maker’s competitiveness.
“We have removed a substantial health care liability from our balance sheet and have significantly reduced health care expenses,” he said.
Ford also said it prepaid $500 million of debt owed to the union trust.
The company said it transferred to the trust a note maturing in 2022 with an original principal amount of $6.7 billion and present value of $4.8 billion, a second 2022 note with an original principal amount of $6.5 billion and a present value of $4.7 billion, warrants to buy 362 million Ford shares at $9.20 apiece, and other assets worth an estimated $4.1 billion.
The new notes will add about $7 billion of debt to Ford’s balance sheet.
Ford, along with General Motors and Chrysler, set up a voluntary employee beneficiary association, or VEBA, to pay for retirees’ the health care.
Shares of Dearborn-based Ford rose 28 cents, or 2.8 percent, to close at $10.28 Monday.