Ford Motor Co. may make part of its required $859 million payment to a union health-care fund this week in stock, a sign of potential weakness in the shares as the U.S. auto sales recovery stalls, Bloomberg reported.

Ford must pay the United Auto Workers Retiree Medical Benefits Trust by June 30 to fund benefits for former hourly workers. Ford has the option to pay as much as $610 million in stock under an agreement reached with the union last year, and the second-largest U.S. automaker may choose shares in order to conserve cash, said Brian Johnson, a Barclays Capital analyst.

If Ford issues stock to pay the fund, investors may see it as a sign the company considers its shares overvalued in a sales environment that the head of its Americas unit described as “flat-lined.”

“Investors look at this as an indication of whether management sees their stock as cheap or expensive,” said Chicago-based Johnson, who has a neutral rating on Ford common shares. “If it’s cheap, they use cash. If it’s expensive, they’ll use stock.”

John Stoll, a Ford spokesman, declined to comment on how the automaker will pay the trust.

“We’ll meet our obligation,” Stoll said in an interview. “We’re not in a position to talk about an amount or how exactly we’ll pay for it.”

Ford used cash for its first payment of $610 million in December and pre-paid an additional $500 million with its shares in the midst of a fourfold annual gain. The company said at the time that it paid in cash because the stock’s volume-weighted average share price in the period before the payment, which determines the price of the stock it issues to the trust, was $9.13, less than the $10 the stock closed at on Dec. 31.

The stock closed June 25 at $10.75, a 6.2 percent discount to the average of about $11.46 in the previous 30 trading days. The company has 3.34 billion shares outstanding.

The shares fell 32 cents, or 3 percent, to $10.43 at 4:15 p.m. in composite trading on the New York Stock Exchange.

“I see this going equity because of the 30-day share price and the number of new shares would only represent 1.5 percent of total shares in circulation,” said Kristin Dziczek, director of the labor and industry group at the Center for Automotive Research in Ann Arbor, Michigan. “That’s not a whole lot of dilution.”

Ford should pay in cash as it did last time, said Bernie McGinn, president of McGinn Investment Management, which owns 320,000 Ford shares.

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