Ford Makes Offer On $10.4b In Long-Term Debt

Edward Niedermeyer
by Edward Niedermeyer
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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.

Edward Niedermeyer
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  • Runfromcheney Runfromcheney on Mar 05, 2009

    windswords: I didn't think it was a "genius" move, but it is a good example of Ford being ahead of the game and actually trying. GM AFAIK didn't start trying to convert debt into equity until they were running on government funds. So it is just an example of how Ford is trying to restructure instead of just doing nothing then expecting us to keep them alive just because they employ a lot of people. Like some OTHER automakers.

  • Dpeppers Dpeppers on Mar 06, 2009

    runfromcheney They are doing as they were told. They met with the "Task Force". They were told to get ahead of the game, because they are running out of money. They are following the pattern of assistance laid out by the task force. If you can't see the coincidence of the two, then I hope this has helped. Ford is in the same bucket with the rest of them foriegn and domestic. This last man standing crap isn't going ot happen. We are at a cliff staring at the abyss when it comes to cars sales. there is no company on earth that came adjust quickly enough. Honda may be the shining light (small enough to be flexible enough).

  • TheEndlessEnigma Ah Mini, the news no-one was waiting for.
  • TheEndlessEnigma Gruesome Newsom has spoken, you are now required to bow and do his bidding.
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  • Tassos While the Fit is an intelligent design and while I have owned and liked Hondas for decades, asking for $8k, even in worthless 2023 devalued Idiot Joe Biden dollars, for n 11 year old, SUB-civic Subcompact, with 120k miles and who knows what hidden issues, is way too damned much.And as always, you should ask YOURSELF, if you even think bidding on such a tiny, unsafe at any speed (NO passive safety, NO active safety) vehicle:"HOW MUCH IS MY OWN LIFE WORTH"?Or, if you had the bright idea to buy this POS for your college bound kid or grandkid,"HOW MUCH IS his or her LIFE WORTH"?
  • SCE to AUX Seems like a good car at a good price. $7900 can buy a real junker these days.