Ford Equitizing $10.4 Billion In Debt

The only US automotive company not to be on the taxpayer's payroll, Ford, earlier announced it would pursue a proactive debt for equity and cash exchange in which it would convert up to $10.5 billion of its $25.4 billion in debt at year end. The exchange is in fact a combination of three separate transactions:

• $4.88 billion of 4.25% Convertible notes due 2036 which would receive Ford common stock at a premium, or specifically 108.6957 shares per $1,000 in converts. The result would be incremental dilution of approximately 530.4 million new shares, or roughly 22% of the 2.3 billion shares outstanding.
  
  
• $1.3 billion cash tender offer for unsecured, non-convertible debt of which $8.9 billion is outstanding and which will be bought back at 30 cents on the dollar (including a 3 cent early tender premium) (assuming a 30 cent final conversion price this implies $4.3 billion in face notional will be retired).
  
  
• $500 million cash tender offer for Ford's $6.9 billion senior secured term loan, launched by Ford Credit. The term loan will be purchased via a Dutch auction with bids ranging from 38 to 47 cents (assuming the low bid of 38 is the final one, implies $1.3 billion of the term loan will be retired).

The full table of non-convertible securities which are eligible for the conversion is presented below. The conversion is a good start on the way to viability however the next and more crucial step is to have people actually purchase cars. And this is where Ford is in a lot of trouble, seeing how even BMW barely managed to sell a whopping 10 of its 7 series sedans in all of February.

Sphere: Related Content

Bookmark this post with:

• 
• 
• 
• 
• 
• 
• 
• 
• 

More Bad News Out Of Ford

Just what the auto industry needs: Ford, which may have foolishly avoided government aid so far, announced U.S. auto sales in February fell even more compared to January, when the annualized sales rate was the lowest since 1981. Ford sales analyst George Pipas also had this bleak comment to share "We don’t know where the bottom is." January's SAAR was 9.6 million and February numbers which comes out next week should further cement the case that U.S. automakers are simply unviable in current form. Sphere: Related Content

Bookmark this post with:

• 
• 
• 
• 
• 
• 
• 
• 
•