IFS Completes its Primary Responsibilities as Independent Fiduciary to the Ford Motor Subaccount of the United Auto Workers Retiree Medical Benefits Trust

During the 4th quarter of 2010, IFS completed its primary responsibilities as independent fiduciary to the Ford Motor Subaccount of the United Auto Workers Retiree Medical Benefits Trust, after realizing over $9 billion in cash for the Trust.  IFS achieved that by disposing of 100% of the securities Ford had previously contributed to the Trust, as a way to help fund medical benefits for some 200,000 Ford retirees.     The securities consisted of: ·         Warrants to purchase approximately 362.4 million shares of Ford common stock,·         “New Note A” in the principal amount of approximately $4.7 Billion, maturing in annual installments payable in cash through June 30, 2022, and·         “New Note B,” in the principal amount of approximately $5.9 Billion, also maturing in annual installments through June 30, 2022, but payable in either cash or Ford common stock, at Ford’s election.  An independent valuation of the securities commissioned by IFS determined that that the fair market value of the securities  as of December 31, 2009 totaled approximately $7.36 Billion,  compared with the over $9 billion IFS subsequently generated through these transactions:   ·         March 31, 2010:  Sale of all of the warrants through the largest public underwritten offering of warrants in U.S. history.  The Trust received $1.78 Billion in net proceeds through a modified Dutch auction.·         June 30, 2010:  Negotiated $2.9 Billion cash prepayment by Ford and Ford Motor Credit Company of remaining principal value of Note A.  Ford also paid 100% of $250 million principal installment on Note A, and paid in cash, rather than in Ford common stock with a discounted value, the $609 Million principal installment on Note B.  IFS and Ford also agreed to amend Note B to provide Ford with additional future prepayment opportunities at set prices.·         October 29, 2010:  Ford made $3.5 Billion cash prepayment of outstanding balance of Note B, on terms IFS hammered out in June. The combination of transactions completed the Trust’s divestiture of Ford securities, and the cash proceeds were invested in the Trust’s diversified investment portfolio.