UPDATE 2-UAW VEBA trust to net $1.78 bln from Ford warrants

Wed Mar 31, 2010 7:49pm EDT

* Ford says union healthcare trust to net $1.78 bln

* Ford says 362.4 mln stock warrants priced at $5 each

* Warrants listed for NYSE trade starting today (Adds details on warrants pricing, statement from UAW trust representative, background)

DETROIT, March 31 (Reuters) - The United Auto Workers healthcare trust is expected to net about $1.78 billion from an auction of Ford Motor Co (F.N) stock warrants it received as part of its funding, the automaker said on Wednesday.

Ford shares fell 5 percent Wednesday on the New York Stock Exchange after the pricing of the warrants, which generated record net proceeds from such an auction, topping a Treasury auction of Bank of America stock warrants earlier in March.

The U.S. Treasury auctioned two classes of stock warrants in early March, generating net proceeds of $1.5 billion to dispose of the government's remaining investment in the bank.

Ford received no proceeds from the auction of 362.4 million stock warrants by the union healthcare trust that was priced at $5 in an auction on Tuesday.

Independent Fiduciary Services, an independent advisory firm, represented the trust in the auction, which disposed of all the warrants the union's Voluntary Employee Beneficiary Association, or VEBA, received at the end of last year.

The U.S. Department of Labor last week approved the use of the Ford stock warrants as part of the funding for the VEBA, which cleared the way for the auction of the warrants.

IFS said the auction was "intended to help diversify the trust's overall investment program" and support benefits to nearly 200,000 Ford VEBA participants and beneficiaries.

Ford also has the option of paying pay part of its additional funding obligations to the VEBA in company stock over the next several years.

The Ford warrants, which allow the holder to buy the company stock at $9.20 per share, began trading Wednesday on the NYSE and closed at $4.84, down 3.2 percent from the pricing. The warrant offering is expected to close April 6.

Ford, the only large U.S. automaker to steer clear of a U.S. government-supported bankruptcy last year, reported a small profit for 2009 and expects a profit in 2010. The automaker had about 3.3 billion shares of common stock and 70.8 million shares of Class B stock at the end of February.

Ford shares fell 71 cents to $12.57 Wednesday on the NYSE. (Reporting by David Bailey, editing by Leslie Gevirtz)

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