Last Updated Nov 16, 2008 11:27 PM EST
In conjunction with a 2007 collective bargaining agreement between Ford and the UAW, obligation to provide post-retirement health care benefits, such as medical, dental, and vision, shifted from the auto maker to a union-administered trust, called a voluntary employees beneficiary association (VEBA), after December 2009. Approved by a federal judge on August 29, funding terms of the settlement are outlined in the third-quarter 2008 regulatory filing:
- Â· cash of $2.73 billion;
- a $3 billion principal amount secured note, which bears interest from January 1, 2008 at 9.5% per annum, matures on January 1, 2018, and is secured on a second-lien basis with the collateral we have pledged as part of our secured Credit Agreement;
- a $3.3 billion principal amount convertible note, which bears interest from January 1, 2008 at 5.75% per annum, matures on January 1, 2013, and is convertible into Ford Common Stock at a conversion price of $9.20 per share;
- an obligation to continue to make payments for ongoing retiree health care costs through 2009, which we estimate to have a present value of $1.5 billion; and,
- an obligation to make 15 annual installment payments of $52.3 million beginning in April 2008.