form8k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D. C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report: March 9,
2009
(Date of
earliest event reported)
FORD
MOTOR COMPANY
(Exact
name of registrant as specified in its charter)
Delaware
(State or
other jurisdiction of incorporation)
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1-3950
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38-0549190
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(Commission
File Number)
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(IRS
Employer Identification No.)
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One American Road, Dearborn,
Michigan
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48126
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code 313-322-3000
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 1.01. Entry into a
Material Definitive Agreement.
As
disclosed in our Current Report on Form 8-K filed April 11, 2008, we entered
into a settlement agreement dated March 28, 2008 among Ford, the International
Union, United Automobile, Aerospace and Agricultural Implement Workers of
America ("UAW") and class representatives of former UAW-represented Ford
employees, relating to retiree health care obligations ("Retiree Health Care
Settlement Agreement" or "Settlement Agreement"). The Settlement
Agreement provides that upon its implementation date (anticipated to be December
31, 2009), a new retiree health care plan (the "New Plan"), to be
funded by a New Voluntary Employee Beneficiary Association trust (the "New
VEBA"), will be permanently responsible for providing retiree health care
benefits for covered current and former UAW-represented Ford
employees. Under the terms of the Settlement Agreement, Ford is
required to fund the New VEBA through a number of sources, including funds that
are currently in existing voluntary employee beneficiary association trusts
("Existing Internal VEBA"), Ford-issued convertible and term notes, and
cash. The parties to the Settlement Agreement have acknowledged that
Ford's obligations to pay into the New VEBA are fixed and capped as provided in
the Settlement Agreement and that Ford is not responsible for, and does not
provide a guarantee of: (1) the payment of future benefits to plan
participants, (2) the asset returns on the funds in the New VEBA, or (3) the
sufficiency of assets in the New VEBA to fully pay the obligations of the New
VEBA or the New Plan.
Given the
current economic environment, it is important that we remain competitive with
other automobile manufacturers and that we are able to operate profitably at
current industry demand and changing model mix. Our principal
domestic competitors are being required, under the terms of government-funded
restructurings, to seek to reduce public unsecured debt by two-thirds, to reduce
by half the cash expense associated with their retiree health care voluntary
employee benefit association trusts, and to achieve parity in labor costs with
the U.S. operations of non-domestic automobile
manufacturers. Although we have not sought government bridge loans,
we are committed to remaining competitive and have sought to achieve results
similar to those required of these competitors.
Toward
that end, Ford and the UAW have amended the 2007 collective bargaining agreement
in a manner that will allow us to significantly reduce our hourly labor
costs. In addition, we have agreed in principle to modify the
Settlement Agreement by providing Ford the option to use Ford common stock to
pay up to 50% of our future payment obligations to the New VEBA pursuant to the
Settlement Agreement. This modification of the Settlement Agreement
("Modification"), ratified by the UAW membership on March 9, 2009, is subject to
final court approval and other conditions, such as obtaining "prohibited
transaction" exemptions from the Department of Labor to permit the transactions
described, including allowing the New VEBA trust to hold Ford securities
that are not "qualifying employer securities." In addition, in order
to have the ability to exercise fully our option to pay up to 50% of our future
payment obligations to the New VEBA in Ford common stock, we must obtain
shareholder approval as discussed below. We agreed with the UAW that
both the amendments to the 2007 collective bargaining agreement and the
Modification would be conditioned on, among other things, pursuing restructuring
actions with all of our stakeholders, including meaningful debt reduction over
time consistent with the government requirements applicable to our domestic
competitors under their government-funded restructurings.
In the
event that the Modification is approved by the court and the other conditions to
its implementation are met, we would issue to the New VEBA two notes, Note A and
Note B. These notes would be issued to the New VEBA in lieu
of: (i) the notes contemplated to be issued under the Settlement
Agreement (i.e., a 5.75% Senior Convertible Note due January 1, 2013 in the
principal amount of $3,334 million, a 9.5% Guaranteed Secured Note due January
1, 2018 in the principal amount of $3 billion, and a 9% Short Term Note due
December 31, 2009 in the principal amount of $2,281.91 million, which represents
the value of the assets at December 31, 2008 in the Temporary Asset Account
("TAA") established under the Settlement Agreement (together, the "Old Notes")),
and (ii) the base amount payments consisting of annual installments of $52.3
million payable through 2022 under the Settlement Agreement.
Note A, a
non-interest bearing note in the principal amount of $6,630.47 million, would
require us to make cash payments to the New VEBA according to the schedule set
forth below beginning on December 31, 2009, and thereafter on June 30 of each
year in the period 2010 through 2022. Note B, a non-interest bearing note in the principal
amount of $6,511.85 million, also would require us to make payments to the New
VEBA starting on December 31, 2009, and thereafter on June 30 of each year in
the period 2010 through 2022. Note B, however, gives us the option of
making each payment in cash, Ford common stock, or a combination of cash and
Ford common stock. The aggregate principal amount of Note A and Note
B (i.e., $13.1 billion), and the amortization thereof reflected in the schedule
set forth below, represents the equivalent value of: (i) the
principal amounts of and interest payments on the Old Notes, (ii) the annual
$52.3 million base payment amounts, and (iii) an additional $25 million per year
during the period 2012 through 2018, which is intended to cover transaction
costs the New VEBA incurs in selling any shares of Ford common stock delivered
pursuant to the terms of Note B. Note A and Note B do not include or
represent amounts constituting assets in the Existing Internal VEBA ($2.7
billion at December 31, 2008) or interest payments on the Old Notes and base
amount payments made prior to December 31, 2009 into the TAA. These
assets or amounts will be transferred in accordance with the original terms of
the Settlement Agreement.
The
schedule of payments for Note A and Note B is as follows:
Payment
Dates
December
31, 2009: Note A - $1,243.47 million, Note B - $609.95
million
June 30,
2010: Note A - $265 million; Note B - $609.95 million
June 30,
2011: Note A - $265 million; Note B - $609.95 million
June 30,
2012: Note A - $679 million; Note B - $654 million
June 30,
2013: Note A - $679 million; Note B - $654 million
June 30,
2014: Note A - $679 million; Note B - $654 million
June 30,
2015: Note A - $679 million; Note B - $654 million
June 30,
2016: Note A - $679 million; Note B - $654 million
June 30,
2017: Note A - $679 million; Note B - $654 million
June 30,
2018: Note A - $679 million; Note B - $654 million
June 30,
2019: Note A - $26 million; Note B - $26 million
June 30,
2020: Note A - $26 million; Note B - $26 million
June 30,
2021: Note A - $26 million; Note B - $26 million
June 30,
2022: Note A - $26 million; Note B - $26 million
In the
event that we elect the stock payment option for any portion of the Note B
payments due in 2009, 2010, or 2011, the shares of Ford common stock to be
delivered in settlement of such payment will be priced for this purpose at
$2.00, $2.10, and $2.20 per share, respectively (subject to
adjustment for any stock split, stock dividend or stock
recombination). If the
New VEBA sells the shares delivered during this period at a loss (i.e., below
those fixed prices), we have agreed, subject to certain limitations, to pay up
to $50 million per year (or $150 million in total) to reimburse the New VEBA for
some or all of those losses. With respect to payments after 2011
under Note B, in the event that we elect the stock payment option, the number of
shares of Ford common stock to be delivered in settlement of such payment shall
be priced at the average of the volume-weighted average stock price for each of
the 30 trading days ending on the second business day prior to the relevant
payment date.
Our
option to settle with Ford common stock all or any portion of the amounts due
with respect to Note B shall be subject in each instance to the satisfaction of
certain conditions on the applicable payment date, including:
A. No
event of default has occurred under our outstanding public debt securities, bank
credit facilities, or notes or other securities issued to the New VEBA, and we
have paid all amounts due on or prior to such payment date on Note A and Note B
(in cash, or through the exercise of the stock payment option with respect to
any payment or portion thereof or the deferral of any payment or portion thereof
as described below, as applicable);
B. No
bankruptcy or insolvency proceeding has been commenced by or against
Ford;
C. We
have made no assignment for benefit of creditors or admission of general
inability to pay debts;
D. Ford
common stock is listed on the New York Stock Exchange ("NYSE") or other national
securities exchange on the payment date, and the NYSE (or such other securities
exchange) has not commenced or provided notice of the commencement of any
delisting proceedings or inquiries on or prior to the payment date;
E. No
judgment in excess of a specified amount has remained unsatisfied and unstayed
for more than 30 days;
F. No
"termination event" (as defined by the Employee Retirement Income Security Act)
has occurred with respect to either of our two major U.S. defined benefit
pension plans;
G. We
have received no audit opinion containing a going concern explanatory paragraph
for the fiscal year immediately preceding the applicable payment date;
and
H. The
price per share of Ford common stock is greater than $1.00 (subject
to adjustment for any stock split, stock dividend or stock
recombination).
If on any
payment date under Note B, all conditions, other than those described in D, G,
or H above, are met, then, subject to certain conditions and limitations, we
would have the right to not make the relevant payment on such payment date and
instead defer the payment by paying it in up to five equal annual installments
beginning with the next scheduled payment date. This will allow us to
make such payment (or installment thereof) in common stock on any deferred
installment date if all the conditions for payment in common stock have been met
on such date.
Notwithstanding
our option to make payments pursuant to Note B in shares of Ford common stock in
lieu of cash, we intend to use our discretion to determine which form of payment
makes sense on each payment date, balancing liquidity needs and preservation of
shareholder value. In making such a determination, we will consider
facts and circumstances existing at the time of each required payment, including
market and economic conditions, our available liquidity, and the price of Ford
common stock.
Under the
Modification, we also will issue to the New VEBA a warrant entitling it to
purchase 362 million shares of Ford common stock at an exercise price of $9.20
per share, which is intended to mirror the economic value in the Convertible
Note provided for in the Settlement Agreement. In addition, the
Modification provides for certain hedging restrictions, certain sales
restrictions relating to Note A and Note B as well as the warrant and shares of
Ford common stock, and customary registration rights relating to the sale of
shares of Ford common stock received by the New VEBA pursuant to our stock
payment option in respect of Note B, as well as the warrant and shares issued
upon the exercise thereof.
As
disclosed in our Annual Report on Form 10-K for the year ended December 31,
2008, as of February 13, 2009, we had outstanding 2,325,468,761 shares of Ford
common stock. Using the price of $2.00 per share for the December 31,
2009 Note B payment, the number of shares of Ford common stock that could be
issued would be 304,975,000 shares. This issuance to the New VEBA
would make the New VEBA an owner of more than 5% of Ford common stock and, thus,
an "affiliate" of ours for purposes of the NYSE Listed Company
Manual. Accordingly, any further issuance of Ford common stock in
excess of 1% of the then-outstanding amount of shares to the New VEBA in
satisfaction of any portion of a Note B payment would require shareholder
approval. Furthermore, assuming we satisfy all or a substantial
portion of our future payment obligations under Note B by issuing Ford common
stock, we anticipate exceeding the 20% share-issuance limit prescribed in the
NYSE Listed Company Manual. Under this limitation, a company whose
shares are listed on the NYSE cannot, without shareholder approval, issue shares
of its common stock in a transaction or series of related transactions in
amounts equal to or in excess of 20% of the number of shares of common stock
outstanding. Consequently, we will request approval from our
shareholders at our annual meeting on May 14, 2009 to allow us to issue Ford
common stock to the New VEBA as contemplated by the schedule above.
Item 8.01. Other
Events.
We
conducted a conference call on March 11, 2009 to discuss the amendments to our
2007 collective bargaining agreement and the Modification and take questions
from media and analysts. Through March 18, 2009, replays of the call
will be available by dialing toll free 888-286-8010 (within the United States)
or 1-617-801-6888 (from outside the United States); the passcode for the replay
is 29481628. Supporting materials from the call also will be
available at www.shareholder.ford.com.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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FORD MOTOR COMPANY
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(Registrant)
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Date: March
13, 2009
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By:
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/s/ Louis J. Ghilardi
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Louis
J. Ghilardi
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Assistant
Secretary
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