Ford Makes Offer On $10.4b In Long-Term Debt
Dow Jones [via CNN Money] reports that FoMoCo and Ford Credit are prepared to drop precious cash to coax debt holders into converting their notes into Ford stock. Gory details of the deal are below the fold, but numerous sources are confirming that this debt restructuring is a condition for VEBA to accept company stock per its recent agreement. Plus it’s kind of an awesome PR move, in an “eat the weakest first” way. Ford is out doing all the things GM and Chrysler should have done: going to the mats with the UAW and restructuring long-term debt. The two firms actually receiving bailout money dither it away while playing catchup. Of course this doesn’t mean Ford is out of the woods yet, as $10.4B is less than half of Ford’s $25.8B pile o‘ debt. Plus, nobody has actually accepted the offer yet either.
According to Dow Jones, Ford is asking holders of “Outstanding 4.25% senior convertible notes due Dec. 15, 2036, to convert about $4.9 billion in convertible notes. Holders who elect to convert the note into shares of Ford common stock will receive 108 shares of Ford common stock plus $80 in cash for each $1,000 principal amount converted.”
Also, “Ford Motor Credit, its wholly-owned finance arm, has commenced a $1.3 billion cash tender offer to purchase Ford’s unsecured, nonconvertible debt securities, of which about $8.9 billion aggregate principal amount is outstanding. The finance arm also has started a separate $500 million cash offer to buy Ford’s senior secured term-loan debt. The term offer will be conducted through a “dutch auction” under which term-loan lenders will be invited to submit bids to sell their term-loan debt.”
And if that ain’t enough minutiae for ya, know this. Ford also announced its intent to exercise its right to defer future dividend payments on the 6.50 percent cumulative trust preferred securities of Ford Motor Company Capital Trust II beginning in April.
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