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NINETY EIGHT REGENCY

UAW trust expected to net $1.78 billion from auction

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UAW trust expected to net $1.78 billion from auction

BY BRENT SNAVELY

FREE PRESS BUSINESS WRITER

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Ford said today that the UAW’s retiree health care trust is expected to raise $1.78 billion through an auction of warrants that occurred Tuesday.

Ford, which will receive no proceeds from the sale, said the UAW’s retiree trust priced each of the 362.4 million warrants offered at $5.00 each.

The UAW’s Retiree Medical Benefits Trust received the warrants, which are similar to stock options, last year as part of a funding agreement with Ford.

Ford and the UAW agreed to establish the trust, also called a voluntary employee beneficiary association, or VEBA, in 2007 as a way for Ford to move billions in future retiree health care liabilities off of its books and to allow the UAW to manage retiree health care.

The decision to sell all of the warrants was made by Independent Fiduciary Services, an independent investment advisory that was hired by the UAW trust in December.

“The net proceeds are intended to help diversify the trust’s overall investment program and support payment of benefits to its nearly 200,000 participants,” the firm said in a statement.

Linus Wilson, assistant professor of finance and economics, at the University of Louisiana at Lafayette, said the auction tops a similar warrant auction for Bank of America on March 7 that generated $1.54 billion in net proceeds.

“This is the biggest warrant auction in U.S. history,” Wilson said in an email to the Free Press.

This is the biggest warrant auction in U.S. history, topping the Bank of America warrant auction which generated $1.54 billion in net proceeds on March 7, 2010.

The warrants have been listed for trading on The New York Stock Exchange under the symbol “F WS” and are expected to commence trading at 9:30 a.m. today.

link:

http://www.freep.com/article/20100331/BUSINESS01/100331016/1210/Ford-VEBA-auction-to-net-1.78B

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