Ford may pay health debts with stock — a sign of possible weakness

Jun 30 2010

The automaker Ford may pay part of the $859 million it owes a union health care fund using company stock, a move analysts say would show weakness, Bloomberg Businessweek reports. "Ford must pay the United Auto Workers Retiree Medical Benefits Trust by June 30 to fund benefits for former hourly workers. Ford has the option to pay as much as $610 million in stock under an agreement reached with the union last year, and the second-largest U.S. automaker may choose shares in order to conserve cash, said Brian Johnson, a Barclays Capital analyst." The auto market had been recovering, but a Ford executive recently said sales had flat lined. Analysts said using stock to pay a portion of the debt may suggest that Ford views its stock as overvalued (Naughton, 6/28).