DETROIT - A union trust fund that pays the health care bills for retired Ford factory workers raised $1.78 billion by selling warrants to buy the automaker's stock.
The United Auto Workers trust auctioned warrants to buy 362 million shares on Tuesday for $5 each. They can be exercised any time between now and the end of 2012.
More than 200,000 retirees and their spouses are covered by the trust, which started paying their health care costs in January after Ford began transferring to the fund cash and other assets, including the warrants, valued at $14.8 billion.
The trust was established in 2007 as part of negotiations between Ford and the UAW. It allowed Ford to remove billions of liabilities from its books and gave the union control of health care coverage at a time when Ford was struggling.
After watching Ford's share price climb to a five-year high recently, the UAW-run trust saw an opportunity to cash in rather than wait. The auction conducted by Deutsche Bank diversifies the trust fund's investments, but some analysts say even with the extra billions, the trust is in danger of running out of cash.
Ford said in a statement all the warrants had been sold, but it would not say who bought them or if the automaker purchased any. The UAW would not comment on the sale.
Ford's crosstown rivals, General Motors Co. and Chrysler Group Llc, have similar trusts set up with the union, but they must be funded by the sale of shares when the automakers become public companies again.