Ford may have had a difficult time initially selling the United Auto Workers on the idea of a voluntary medical benefits trust back in 2007, but the union isn’t complaining these days. The UAW recently listed its 362 million stock warrants on the New York Stock Exchange, and is expected to receive approximately $1.78 billion from the sale.
Sales of the warrants began earlier this morning at an auction based in the Netherlands and at the NYSE. The sale — which allows buyers to purchase Ford common stock for a price of $9.20, $3 less than its current trading price — is expected to close on April 6.
This is the UAW’s second public offering of warrants lumped into the VEBA agreement. When originally issued, the warrants were virtually worthless, but have significantly increased in value as Ford’s stock prices simultaneously grew. The UAW will use the proceeds from selling the stock to directly fund retiree medical benefits.
Ford initially signed on to fund the VEBA fund back in 2007, but negotiated in September 2009 to pay a portion of its obligation with the stock warrants. The automaker still owes the UAW a $7-billion payment into the trust.