By on February 27, 2014

Ford Glass House

In anticipation of heavy spending this year and beyond, Ford is seeking a line of credit expansion totaling $12 billion.

Bloomberg reports the line of credit will consist of a $9 billion revolving loan for a term of five years — which can be borrowed again once repaid — augmented by a $3 billion financing pact set to expire within three years of issuance. The Blue Oval may pay 1.5 percentage points for the line expansion, which is more than the three-month LIBOR rate on both items meant to replace a $10.7 billion credit line expiring in 2017.

Funding for the line is being led by JPMorgan Chase, helping to drive the heavy spending Ford anticipates this year as more new models — such as the new Mustang and F-150 — roll off the assembly line.

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19 Comments on “Ford Seeks $12 Billion Credit Line Expansion...”


  • avatar

    that’s a very old historic building, particularly when you view it up close. the modern Ford resides in the structure behind this one but it’s nice to see the old digs still utilized and preserved for posterity.

    • 0 avatar
      bball40dtw

      Glass House will be 60 years old in a couple years. I still wish the Rotunda didn’t burn down. Unfortunetly, it would probably be a Walgreens, CVS, or Wal-Mart now…

    • 0 avatar
      Loki

      The structure behind WHQ Building is Ford Motor Credit Company. Mulally has an office in WHQ, not really sure what you’re on about.

    • 0 avatar
      Drunkonunleaded

      Actually a part of the Henry Ford Community College campus, M-TEC, resides on the old Rotunda property.

      https://mtec.hfcc.edu/

      I am still disappointed that the “new Rotunda” aka “The Spirit of Ford” closed down after a few years of operation and is not a conference/media center.

  • avatar
    raresleeper

    Spend it on R&D. Spend it on R&D.

    Oh, by the way, spend it on R&D.

    • 0 avatar
      PrincipalDan

      Never a bad place to use your money especially in a highly competitive field.

      • 0 avatar
        DeadWeight

        Spend a HUGE chunk of it on improving vehicle reliability, durability & serviceability.

        Follow Hyundai’s lead.

        That’s TRULY what Ford needs to do if they want to win the long game; They’re incurring many penalties and pissing off many current owners at present do to lack of vehicle reliability, durability & serviceability.

        If this sounds like the musings of someone who “hates Ford,” the exact opposite is true.

        • 0 avatar
          TomHend

          @Deadweight, I am serious and I would like your advice, between Ford and GM, what are your favorite truck and car models for a 50 year old, 6′ geezer?

          I enjoy your rants.

          • 0 avatar
            DeadWeight

            Tom, first of all, thanks for the compliment.

            I know I come across as prickish sometimes, but people who are related to me or in my circle of friends will honestly say (I hope) that I am genuinely funny (at least in real life) because of my cynical nature and dry sense of humor.

            With that out of the way, vehicle tastes & preferences are so subjective that I wouldn’t know where to begin.

            I can tell you that my major criteria for any vehicle (living in Michigan, with terrible road surfaces) are:

            1) Reliability – No matter how great a vehicle otherwise may be, if it doesn’t reliably start, run or leaves one stranded, or becomes problematic to the point it spends more than a day or two out of commission per year due to non-wear & tear issues, I overcome frustrated and lose faith in it. I’m speaking of vehicle purchased new, and generally speaking, referring to the first 6 (or 8) to 10 years of ownership.

            2) Ride Quality & Torsional Rigidity of Chassis – This is why I emphasized living in Michigan and dealing with its horrible roads. If a vehicle doesn’t have a solid ride (and I prefer a quiet & smooth one, although a more firm ride works for others) that can absorb the punishment that the roads throw at it, day after day, without complaint, I frown upon it. Check kit the potholes this year if you happen to live in the frost belt. Yikes!

            3) Easy to service & perform basic maintenance upon – I like to do my own oil changes, gear oil changes, brake pad changes, etc., in part because I like to ensure these things are bing done properly, with quality fluids and parts, but also because it’s something I enjoy. The last thing I want is a vehicle that is thoughtlessly designed whereby maintenance or basic repairs are a huge, time wasting endeavor, because the engineers didn’t design ease of maintenance & basic repair into the vehicle from the start.

            4) I prefer manual transmissions. I have had many automatic transmissions fail prematurely, but I have never had to repair or replace a clutch or any other manual gearbox component prior to the 130,000 mile mark. This is hugely subjective, and it also almost always means resale value on a vehicle will be lower than its automatic equipped equivalent, unless it’s a sports car of the kind where a manual transmission provides a performance advantage.

            Narrowing choices down to Ford & GM, my respective favorite vehicles from them are, in no particular order:

            1) Chevy Silverado Crewcab with the 5.3 liter. It rides great, is solid, has a proven motor & drivetrain, is nearly as fuel efficient on the highway as many large sedans, has a roomy “back seat,” and GM is finally starting to aggressively deal on them.

            2) Chevy Cruze with the 1.4 liter and manual transmission. This is a SOLID compact sedan that rides better than many midsize vehicles IMO. In fact, it has a ride that reminds me of late 80s BMWs in terms of solidity (despite being fwd). It has better fit & finish than many/most competitors. 2 things I do not care for are a) except in higher trims, as in the Focus, GM forces you to take rear drum brakes, and b) there is very mixed data regarding its reliability, short and long term – this IS a major issue as far as I’m concerned, and gives me unease given that I keep my vehicles for a while.

            3) Ford Taurus – This car deserves more credit than it receives. Despite not being as efficient as the CamCords, it really is in a different league, and has a more solid, comfortable, quiet and substantial presence than those other cars. It is of average reliability from what I have gathered.

            4) Ford Fusion with the 2.5 N/A motor and manual transmission. The car really does have a fantastic ride with very good road manners, and is quiet & comfortable at a complete level above the CamCords. It feels more German than Japanese or domestic, but I’d only buy one with the normally aspirated 2.5 liter (shared by last gen Mazda) and a manual transmission due to reliability concerns.

            5) Buick Regal 2.0T. This car is probably my favorite riding GM passenger car, but if you’re looking for a big back seat or the most reliable vehicle, it may not be for you (it’s probably better leased than purchased for most people for the reliability/depreciation reason).

            6) Chevy Avalanche – Wait. GM dropped it…why? It rode great, was fairly bulletproof, was versatile, and more comfortable than most passenger cars while offering up tree stump pulling torque and utility. These are great vehicles, and EVERYONE I met who had one, nearly without exception, loved them dearly, with many being repeat buyers.

            7) Ford Flex – Tons of interior room, quiet & smooth ride thanks to a long wheelbase, fairly reliable, low floor for easy ingress/egress, the interior space efficiency of a large minivan, but without the minivan stigma that many people find so hard to live with (for reasons foreign to me). Downsides? Ford wants way too much for them new, IMO, and they chug gas.

            Why not Chrysler? If it’s in your zone of consideration, the following vehicles are not only my favorite “domestics,” but favorite vehicles overall, dollar for dollar, out of any in their respective segments:

            1) Chrysler 300/Dodge Charger – Solid, smooth, quiet, well built, easy to service vehicles, now available with an 8 speed transmission that when paired with the 3.6 liter Pentastar, is simply fantastic. These are the closest things now available that are true luxury for an affordable price and they have a good standard warranty bumper to bumper and especially on the powertrain.

            2) Dodge Durango – There’s no better vehicle available in its class for the money (they deal on these), period, than the Durango. Solid, quiet, safe, relatively efficient with the 8 speed transmission, and now with a much improved interior for 2014. I could cover the badges inside and out, ask people to compare it to the Mercedes ML350 (from which it is derived in terms of chassis/platform), and most people would literally give it a tie OR WIN after driving it or in it over real world roads. With the 4×4 (they call it AWD) and 2nd row captains chairs, it’s a freaking luxury vehicle through and through, and solid as a rock. Get it with the Group IV tow package if only for resale value (the 3.6 can tow 6400 lbs and the V8 7200 lbs) because many 2nd hand buyers in this class tow boats, etc., and the tow package also gives you a 2nd transmission cooler for enhanced reliability (IMO).

        • 0 avatar
          Cymen

          I can’t reply to your post below but can you actually get the Ford Fusion with 2.5l and manual? On ford.com, it’s only showing the 1.6l turbo and the manual. I’d consider an S with the 2.5l and a manual.

  • avatar
    stephenjmcn

    Am I right in saying this is a refinance of an existing $10.7b credit line, as opposed to an entirely new $12b?

    • 0 avatar
      Vulpine

      I think some would agree with you, but the terminology states that the existing one is set to expire, so depending on who you talk to this could be viewed as ‘all new’ to replace that one.

  • avatar
    Firestorm 500

    Huh. I thought they were awash in cash due to record profits.

    • 0 avatar
      Astigmatism

      They probably are, but LIBOR+1.5% is so cheap they may as well take it.

      NOTE TO CAMERON: that is, in fact, “1.5% more than LIBOR,” not “1.5%, which is more than LIBOR. Of course, LIBOR is so low these days that it’s close to the same thing.

  • avatar
    olddavid

    I’d give it to them in a heartbeat under those terms – but I’m $11 billion or so short. The Blue Oval guys are just about the sharpest domestic producers, with the stones to bet the farm they’re right. They did it before, and you don’t see anyone bailing on them now. This would be oversubscribed were it an IPO. Besides, JPM can always manipulate LIBOR should the terms go south on them.

  • avatar
    Lorenzo

    The last time Ford went deep into a line of credit was when they mortgaged the blue oval itself, just before the economy went off the cliff, the stock market took a dive and there was no credit available for GM and Chrysler to bail themselves out. Do the finance wizards at Ford know/anticipate something?

    • 0 avatar

      > The last time Ford went deep into a line of credit was when they mortgaged the blue oval itself, just before the economy went off the cliff, the stock market took a dive and there was no credit available for GM and Chrysler to bail themselves out. Do the finance wizards at Ford know/anticipate something?

      Waiting for that broken clock to swing back around?

  • avatar
    deanst

    This just increases the amount, extends the term, and lowers the price of the existing facility. The facility was basically undrawn at year-end – its just there in case everything goes to hell and ford needs some liquidity.

    By the way, its probably not a good idea to just copy the content of an existing news article – especially when it was so poorly written to begin with.

  • avatar
    HerrKaLeun

    “In anticipation of heavy spending this year and beyond”

    so all those turbomotors and mysync will get recalled and replaced and they actually honor the warranty?


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