Ford starts conversion offer for 6.5% cumulative convertible trust preferred securities

By Jennifer Chiou

New York, July 2 - Ford Motor Co. announced the launch of a conversion offer for the 6.5% cumulative convertible trust preferred securities of its wholly owned subsidiary trust, Ford Motor Co. Capital Trust II.

The Dearborn, Mich.-based automotive company said that the trust preferred securities, which were issued in 2002, have an aggregate liquidation value of about $5 billion.

Each trust preferred security has a liquidation value of $50.00 and is convertible into 2.8249 shares of Ford common stock at the holder's option.

The conversion offer is set to expire at 5 p.m. ET on July 31. The settlement date is expected to be Aug. 3.

Holders who elect to convert their trust preferred securities into shares of Ford's common stock will receive 2.8249 shares of Ford common stock plus a premium, consisting of shares of Ford common stock valued at $14.25 for each trust preferred security.

The subsidiary trust's sole assets are $5.2 billion principal amount of 6.5% junior subordinated convertible debentures due 2032 of Ford Motor Co., which will be canceled to the extent trust preferred securities are converted into Ford common stock. Through the debentures and other instruments, Ford has effectively guaranteed the trust preferred securities.

The number of premium shares received will be determined by the average market price of Ford common stock on July 25, 26 and 27, assuming the offer is not extended.

Georgeson, Inc. is the information agent (888 605-7541).

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