Ford is looking to get $10.4 billion in long term debt off of its books, and the price of admission will be steep. Ford will pay a $80 premium per $1,000 to debt holders willing to convert senior convertible notes to common stock in the company. If Ford hits its target, it will reduce its outstanding debt from $25.8 billion to $15.4 billion, which would greatly reduce the amount of money lost to interest paid on that debt. Ford also recently came to an agreement to exchange half of the $13 billion owed to the UAW to cover health insurance, further reducing the amount of cash the automaker will need to dole out in the future.
With a bad economy taking its toll on sales, Ford needs to turn over every stone it can find to stem losses. The alternative is getting in line behind its cross-town competitors for some government-issue cheese.
[Source: Automotive News, sub. req'd | Photo by Bill Pugliano/Getty]