• Nov 27, 2006
Ford announced today that it plans to acquire a financing package worth a heady $18 billion. The extra money will ensure that Ford survives the next couple of years while Alan Mulally and company attempt to turn the automaker around and bring profits back to the Blue Oval. Automotive News reports that Ford will spend $8 billion in cash by year's end, leaving it with $20 billion in the bank, so to speak. The new financing package that should be completed by December 31 will then boost Ford's liquidity to $38 billion. Ford says the added cushion will allow it to weather a recession or other unanticipated events that may come its way. Analysts note that while the automaker has bought itself a few years of secured operations, the mere fact the company went for the financing package means that it's going through money faster than originally anticipated, which is a bad sign. Either way, Ford will finish out the decade come hell or high water now, which is news we like to hear. With that monkey off its back, hopefully the automaker can now get down to the business of building better cars.

If you're interested in financial legalese, check out Ford's full press release after the jump.

[Source: Ford and Automotive News]

PRESS RELEASE:

FORD ANNOUNCES PLANS FOR DEBT FINANCING

DEARBORN, Mich., Nov. 27 – Ford Motor Company [NYSE: F] today announced that it plans to obtain financing totaling approximately $18 billion in order to address near- and medium-term negative operating-related cash flow, to fund its restructuring, and to provide added liquidity to protect against a recession or other unanticipated events.

The financing transactions consist of:
  • new five-year senior secured revolving credit facility of approximately $8 billion that is intended to replace Ford's existing unsecured credit facilities of $6.3 billion; senior secured term loan of approximately $7 billion; and
  • unsecured capital market transactions of approximately $3 billion, which may include unsecured notes convertible into Ford common stock.
  • The size of the individual components of the financing may vary depending on market conditions.
  • Borrowings under the senior secured revolving and term loan credit facilities will be secured on an equal basis by first-priority liens on principal domestic manufacturing facilities (subject to public debt indenture limitations) and substantially all of the Company's other domestic automotive assets, certain intellectual property, certain real property, all or a portion of the stock of certain subsidiaries (including Ford Motor Credit Company and Volvo), certain intercompany payables and notes, and up to $4 billion of domestic cash without restriction on its use.
The arrangers for the senior secured credit facilities are Citigroup Corporate and Investment Banking, Goldman Sachs Credit Partners L.P., and J.P. Morgan Securities Inc.

Ford expects these transactions to close prior to December 31, 2006.

Upon completion of the transactions, Ford expects to have Automotive liquidity of approximately $38 billion at year end 2006, consisting of gross cash (i.e., cash, cash equivalents, loaned and marketable securities and short-term Voluntary Employee Beneficiary Association assets) and available credit facilities.

Ford Motor Company, a global automotive industry leader based in Dearborn, Mich., manufactures or distributes automobiles in 200 markets across six continents. With about 300,000 employees and more than 100 plants worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Motor Credit Company.

Forward-Looking Statements: Forward-looking statements herein regarding our financial plans are based on expectations and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation, market conditions and the other factors described under the heading "Management's Discussion and Analysis of Financial Condition and Result of Operations – Risk Factors" in our most recent Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission.


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  • 13 Comments
      • 8 Years Ago
      Truly amazing how some people wish American car companies the worst. I'v ehad my problems with the UAW in the past, but I don't wish these companies to go out of existence. And the simple fact is that many of the foreign (Japan, etc) do have government subsidies that help them out. Quite frankly, there are quite a few boring cars made by all the manufacturers throughout the world. I do wish that Ford would produce more of their European cars, but I definitely do like some of their current lineup.
      • 8 Years Ago
      This is certainly a bold move.
      • 8 Years Ago
      if ford left the market, jobs would not be lost to the extend you say.
      The market would have a shortage of about 3 million cars with ford of the picture. everybody else would boost output. So dont worry. America will still sell 17 million cars a year and the suppliers will be fine.
      • 8 Years Ago
      Please, Richard, tell us ALL how you own your own business again...and how you pay your employees more than everyone else does for comparable labor!

      It's the Holidays...you'll feel GOOD about yourself once again. Share it with EVERYONE, there Mr. Dudly Do-Right.

      And btw, Richard, it HAS happened to EVERYONE ELSE...so what's your point? GM and Ford are only Catching UP!. They've been living in the woods for the past 30 years, in their own little Private "Detroit"...while the entire FREAKIN' World has passed them by!

      HERE COME THE ROOSTER!!!

      Anyone want to buy a slightly used pos GM vehicle??? You'd be doing the economy (and myself) a blessing!

      I just wish they would have made it an even 40 (it just sound SO much better :)
      Clyde Batter
      • 8 Years Ago
      Sounds like the $1 billion deal Chrysler borrowed years ago when it was bankrupt, only they had Lee Iacocca genius to bail them out. Ford ain't got no savior(s), and other than the Mustang, they ain't got no cars worth a *&^%$
      Paul
      • 8 Years Ago
      bye bye shareholder equity

      the shareholders would have been better served if the company liquidated a year ago.
      • 8 Years Ago
      No surprise Ford is in this kind of shape. How the mighty have fallen. But I disagree about complaints regarding the Fusion--I think it is a good sedan. Not great, but good.
      • 8 Years Ago
      Classic Economics 101 states this is a good move. And yes...it's a Doozy of a Bold Movement (BM).

      A company which has existed on welfare for the past decade+ is now waking up to those "tough choices" each and every other working American deals with on a daily basis.

      For example: "How do I best position myself for gainful employment...such that I can put bread on my table and a roof over my head?". For 90+% of Americans, the answer is "Through hard work and wise decisions".

      Well, Ford and their workforce has had a free ride for so long I can't recall when the DIDN'T have a free ride!

      2006 PEOPLE!! The year Delphi announces 11 plant closures, GM announces 12 plant closures...and Ford announces 16 plant closures!!! Has ANY OF THIS HIT HOME YET?!?!?!

      ABSOLUTELY PHENOMENAL!!!

      As Alice in Chains once sang so eloquently: "Here come the rooster!!!".

      F-350's, Suburbans, Silverados, and craptastic "token" automobiles (Monte Carlos, Ford 500s, ...etc.).

      Is it any WONDER this BM stinks to high hell???

      My reply: NO!

      Sure, a whopping 39 Plant Closures all due to arrogance, greed, misplaced patriotism, ...all the stuff suckers are made of.

      Hard work??? Now THERE'S a concept!!!

      Here come the rooster, INDEED!!
      • 8 Years Ago
      I wonder when Ford will pull out of the US market?
      • 8 Years Ago
      The UAW is the root of all evil.
      • 8 Years Ago
      YEAH! Lets kill Ford! Lets put hundreds of thousands of employees out of work! And that doesnt even count supplier companie...woooo!!!! And on top of that, lets kill our economy while we're at it!!

      /sarcasm

      Idiot.

      Anyways, I am giving Mullaly a chance. He seems to have a brain between those ears of his...unlike Billy Boy...
      • 8 Years Ago
      They still do not have any products that I will buy. The Fusion shape looks good from a distance but up close the details are tacky. All the chrome is a bit much for me. If I could combine the tail lights from the Mercury and the truck lid from the Ford I would like the rear. At the front give me a body colored grill and add the Mercury headlights. If I were in the market for a coupe the Mustang is very nice but again small things would have to change before I bought. That is about the only two they have that even cause a blip on my interest meter.
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