Ford Motor Co. said late Monday it will offer $750 million in new preferred shares, convertible to common stock, to raise cash. Chrysler Corp. recently offered 35 million shares of common stock in a sale that brought it about $350 million.
In a filing with the Securities and Exchange Commission, Ford said Goldman, Sachs & Co. and Merrill Lynch & Co. will act as co-lead underwriters on the issue.
Ford President Philip Benton, in Chicago to preview the automaker`s 1992 model lineup, said proceeds from the stock offering will be used for ”general purposes, anything we`d use cash for, including new products.”
Chrysler`s offering was made to ensure the automaker would be able to bring out new products, especially the long-awaited front-wheel-drive LH body cars.
Benton said the $750 million raised by Ford could go up by 15 percent. It`s estimated the action would dilute existing shares by 4 to 5 percent.
He said the dilution at Chrysler, by comparison, is greater than 5 percent, ”and they offered only common shares. We`re offering preferred stock that can be converted to common.”
Benton said Ford`s fundraising effort ”is not a life-or-death situation, but we looked at our cash requirements and where the money would come from and thought it prudent to have a stock offering rather than going to the debt market.”
Asked whether this would have been necessary if Ford were making money, he said:
”This would have been inevitable if we were earning money, but we wouldn`t have needed as much cash if we were earning money.”
