Ford to price $2 billion seven-year convertibles to yield 4%-4.5%, up 22.5%-27.5%

By Rebecca Melvin

New York, Nov. 2 - Ford Motor Co. plans to price $2 billion of seven-year convertible senior unsecured notes after the close of markets on Tuesday, which were talked to yield 4% to 4.5% with an initial conversion premium of 22.5% to 27.5%, according to a market source.

The registered offering, for which there is a $300 million greenshoe, is being sold via joint bookrunners Citigroup Global Markets Inc., Bank of America Merrill Lynch, J.P. Morgan Securities Inc., Barclays Capital Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co., Morgan Stanley & Co. and RBS Securities Inc.

BNP Paribas Securities Corp. and HSBC Securities (USA) Inc. also will be included in the underwriting syndicate.

Ford also plans to sell up to $1 billion of common stock under an equity distribution agreement with certain broker/dealers. These sales are expected to begin in December and will be conducted over a several-month period.

The convertibles are non-callable for five years, and after that Ford may terminate conversion rights or call the bonds if its stock price is more than 130% of the conversion price.

There are no puts.

There is standard dividend protection, contingent conversion at a 130% stock price trigger and standard takeover protection. Conversion will be settled via cash, stock or a combination of the two.

Proceeds from the convertible offering will be used for general corporate purposes.

Ford is a car and truck maker based in Dearborn, Mich.

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