Ford Motor Company (NYSE:F) has announced the extension of its Tax Benefit Preservation Plan (TBPP), initially established to safeguard the company's substantial tax attributes, including tax credit carryforwards. The TBPP was due to expire on September 30, 2024, but with the approval of Ford's Board of Directors, Amendment No. 5 to the TBPP extends the expiration date to September 30, 2027.
The extension is subject to earlier termination events, including the final adjournment of Ford's 2025 annual meeting of shareholders if shareholder approval is not received prior to that time. The TBPP, first put into effect on September 11, 2009, has undergone several amendments, with the most recent being Amendment No. 4 on September 9, 2021.
As of the end of 2023, Ford reported tax attributes that could offset approximately $43 billion of taxable income, which can be used to reduce federal income tax liabilities. However, these benefits could be limited if an "ownership change" occurs, as defined under Section 382 of the Internal Revenue Code.
The TBPP includes a mechanism to deter any person or group from gaining a 4.99 percent or more stake in Ford's outstanding common stock, which would trigger significant dilution of that entity's ownership interest.
This is achieved through the distribution of preferred share purchase rights in 2009, which become exercisable upon such an event, allowing other shareholders to buy additional common stock at a discount or, alternatively, allowing Ford to exchange each right for one share of common stock.
Ford's Board has the authority to exempt any stock acquisition from the TBPP's terms and retains the right to amend or terminate the plan while the rights remain redeemable.
This strategic move by Ford, detailed in a recent SEC filing, is designed to maintain the company's financial flexibility by protecting its ability to utilize valuable tax credits. The full amendment to the TBPP is included as an exhibit in the SEC filing.
In other recent news, the automotive industry is observing a surge in hybrid vehicle sales, boosting the demand for platinum group metals (PGMs) like platinum and palladium. Companies such as Anglo Platinum, Impala Platinum (OTC:IMPUY), and Sibanye Stillwater (NYSE:SBSW) are experiencing renewed interest in PGMs. The trend is contributing to a 9% increase in automotive PGM demand, according to Johnson Matthey (LON:JMAT), a catalyst maker and PGM specialist.
In the bond market, U.S. corporate borrowers are securing funding before potential disruptions from the Federal Reserve's upcoming rate decision and the U.S. presidential election. Approximately 35 corporate issuers launched new bond offerings recently, including automotive financiers such as Honda (NYSE:HMC) Finance, General Motors (NYSE:GM), and Ford Motor.
Ford Motor Company has also announced a recall of 90,736 vehicles due to a potential engine valve issue. The recall affects certain models from the 2021-2022 lineup. Dealerships will conduct an engine cycle test on the affected vehicles and replace engines if necessary.
The U.S. Trade Representative's Office (USTR) has postponed the final decision on whether to increase tariffs on a range of Chinese-made goods, including electric vehicles (EVs), batteries, semiconductors, and solar cells. The decision, initially set to take effect on August 1, has been delayed to review over 1,100 public comments from industry stakeholders.
Finally, the Biden-Harris administration is finalizing increased tariffs on certain Chinese imports. The implementation of the new tariffs was postponed to September as the USTR reviewed public comments. Companies like Ford Motor have appealed to the USTR to lower proposed tariffs on essential materials like artificial graphite, used for electric vehicle battery production.
InvestingPro Insights
As Ford Motor Company (NYSE:F) takes measures to protect its valuable tax credits, investors may find additional context in the company's financial performance and market position through recent data and analysis. According to InvestingPro, Ford is a prominent player in the Automobiles industry and has maintained dividend payments for 13 consecutive years, showcasing its commitment to returning value to shareholders. This is particularly noteworthy as the company's dividend yield stands at a significant 7.34%, which could be appealing for income-focused investors.
On the financial front, Ford's market capitalization is currently $42.46 billion, with a P/E ratio of 11.09, indicating how much investors are willing to pay for each dollar of earnings. This is complemented by a Price/Book ratio of 0.98, suggesting that the company's stock is trading close to its book value. While Ford has experienced revenue growth of 6.2% over the last twelve months as of Q2 2024, it is also important to note that the company suffers from weak gross profit margins of 8.04% in the same period. Investors looking for deeper insights can find more InvestingPro Tips, with 12 analysts having recently revised their earnings upwards for the upcoming period, signaling potential optimism in Ford's financial prospects.
For those interested in further analysis and tips, additional insights are available on InvestingPro, including a total of [number] tips for investors considering Ford as part of their portfolio. Visit https://www.investing.com/pro/F for more exclusive information.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.