A question about Ford stock for the market savvy among us.

[leeroysphitz]

Ford is looking to privatise. Is this true? What are the impications for the average shareholders.

If Ford begins to buy back it's stock in order to privatise how can they keep the price per share from skyrocketing?

How dose a "reverse split" work?

TIA for any info on this issue.

[Blackhatjack]

1. They are getting out in front of coming huge drop in price of stock...

...with the announced plan to offer 0% financing "for everyone" and the massive inventories of '06 vehicles and the closing of US plants, you can expect bad reporting numbers are going to be worse than anyone imagined even 30 days ago.

By making the announcement that they may take the company private, they are dangling the possibility of something rather than nothing before shareholders as the stock value plummets.

Keep in mind that no hard offer has been made, and won't be made until the value drops significantly more than it is today.

[leeroysphitz]

2. Thanks Blackhatjack.

Any ideas on this "reverse split" thing I've heard about?

[HamdenRice]

3. Here's how a tender offer works

The company will make a public offer to purchase all of its shares. In accordance with a vote of its board of directors, it will provide for a target percentage of shares that it must successfully purchase. Some people will decide not to take the offer, but if Ford reaches that percentage, then in accordance with its resolution and the corporation laws of the state of incorporation, it can then force the hold outs to take their offer.

That way holdouts cannot hold out for a higher price than was offered in the tender offer.

It's not fair, but that's the way it is. It's kind of like a corporation has a right of eminent domain over its own shares to prevent hold out pricing.

[leeroysphitz]

5. Thanks Hamdenrice.

I appreciate the info.

[madokie]

6. it happened to us on stock in our local bank a couple years ago

we had no choice but to allow them to buy them back. it was going to be one of the things that would have paid a bill or two as we went into retirement.

[Blackhatjack]

7. The more likely scenario will be....

...the prospective purchasers will approach the unions and demand that all union contracts, all benefits, all pensions, be dissolved to facilitate the purchase and continued operation of the company --and incentive that jobs will be saved. If the unions say no, then in that event there will be a petition to force the company into involuntary bankruptcy. They will then purchase the assets of the company "free and clear" of all outstanding obligations(except negotiated tax liabilities and negotiated secured creditor claims), be relieved of paying any outstanding benefits and pensions or anything else owed to workers, and the stock will become worthless.

THis is how it is done. So saavy shareholders will read the handwriting on the wall and take something rather than nothing.

A reverse stock split is simply a consolidation of outstanding shares into a smaller number(ie. 3 to 1 reverse split means that 300,000 outstanding shares at $1/share become 100,000 shares at $3/share, the same proportional value). THis is helpful when it comes to acquiring the necessary number of shares to gain control, but it does not change the relative value of the stock as a whole.

[acmejack]

8. So all the retirees are screwed?

Their pensions are gone?

[Nimrod2005]

10. Yes. Make no mistake about it...That's one of the main goals of

whatever they do next...

[acmejack]

12. Corporate promises are worthless!

But don't you dare default on a loan! They will hound you to the ends of the Earth & legally at that. I read that horror story someone posted the other day about the debt collection services owned by the two brothers, it was scandalous!

[HamdenRice]

11. That's not that likely

First of all, when a company takes itself into bankruptcy, that is voluntary banruptcy, not involuntary. If they want to control the process and outcome, they use voluntary bankruptcy and reorganization. Involuntary bankruptcy is initiated by the company's creditors, not by management.

I don't think this is likely though, because bankruptcy wipes out all stockholders altogether and each layer of debt holders (bond holders, debenture holders etc) move one step closer to equity. So the end result is that the bondholders become the owners of the company. In Street slange, everyone takes a "haircut" because of the "cram down." It isn't pretty for anyone.

That seems much too drastic for what they are trying to accomplish.

[Blackhatjack]

13. It is very likely because "prepackaged bankruptcies" occur every day...

...and not all bankruptcies are voluntary which are "prepackaged" with the creditors.

You have to remember that the goal of reacquiring the company is to acquire all of the assets at pennies on the dollar, free and clear of all obligations to workers and shareholders.

If it can be done without going the bankruptcy route, they would rather wear the mantle of "saving" the company by taking it private. However, the bottom line is acquiring assets and avoiding obligations.

[ThomWV]

4. Easy

Buy it slowly and buy it when its down.

Go take a look at how Ford has handled stock transactions since its founding and you will see a tale of Corporate greed the likes of which are hard to match. Ford was just plain evil, no other way to describe it. That evil showed through in how stock was handled by that company. Basically the company was financed by the Dodge brothers (who were absolutely robbed by old Henry) then while the family held control a second class stock (no value, no dividends) was forced on the dealerships to finance the families private empire's growth.

With a history like that there's little doubt that the future won't benefit anyone other than the Ford family either.

[Nimrod2005]

9. If they decide to take the co. private, they will buy your shares

for some price...They may offer $10 or so. That's all. It is that simple. They can't prevent the stock from moving higher, but they don't have to match the market price either.

Reverse split is giving you less shares for the same money you put in, but your overall investment amount does not change.

Example bought $100 worth of stocks, at $10 a share, you own 10 shares. They do a 10-1 reverse split, so you now own 1 share at $100 a share. Reverse splits are a silly game.

Ford is a very sick company. Stupid tricks won't help the company. GM is even sicker...