FORD CUMMINS COMING SOON?!?
LEAD: The Ford Motor Company and the Cummins Engine Company have agreed to several provisions intended to cement their new relationship, according to documents filed yesterday with the Securities and Exchange Commission.
The Ford Motor Company and the Cummins Engine Company have agreed to several provisions intended to cement their new relationship, according to documents filed yesterday with the Securities and Exchange Commission.
Earlier this month, Ford told Cummins it could supply the diesel engines for its medium-duty trucks, and it became one of Cummins's largest investors when it received a 10.8 percent stake and a board seat in exchange for a $100 million cash infusion.
Though the deal also called for Cummins to sell Tenneco Inc. a 10.8 percent stake and Kubota Ltd. of Japan a 5.4 percent stake, Ford extracted the most protection of the three, partly in recognition of its new business ties with the company.
For instance, the documents state that Ford received a six-year option at no additional cost to buy up to another 10 percent of Cummins. Under most circurmstances, the price would be a 20 percent premium over the then-market price, but no less than $62.50 a share, the same price Ford paid for its current stake.
If Ford accumulates another 10 percent of Cummins, as of 1992 it would be entitled to a second seat on the board, the documents say.
Ford, based in Dearborn, Mich., also has the right to remain the company's largest holder on a percentage basis should Cummins sells a large block of shares to another party. Cummins, based in Columbus, Ind., has also promised not to sell any voting shares to another car or truck manufacturer unless Ford lowered its stake by at least a third.
The three companies are also entitled to a partial refund should Cummins sells additional common shares during the next 12 months at less than $62.50 each. In that case, Cummins would pay Ford, Tenneco and Kubota the difference. Ford and Tenneco are also entitled to whatever terms, other than price and amount, that Cummins grants any other companies owning 10 percent of the concern.
got this from NY times what do you think? the 6.4 out soon?