Ford gets tenders for $2.55 billion 4.25% convertibles due 2016, 2036

By Devika Patel

Knoxville, Tenn., Nov. 24 - Ford Motor Co. said holders tendered $554 million of its 4.25% senior convertible notes due Dec. 15, 2036 and $1.992 billion of its 4.25% senior convertible notes due Nov. 15, 2016 in conversion offers for all of the notes. The company said these conversion offers will reduce the company's automotive debt by more than $1.9 billion.

Ford will pay a total of 274 million shares and $534 million in cash premiums on the expected settlement date of Nov. 30. The cash premiums largely reflect the present value of the interest payments that would have been made on the tendered convertibles, the company said.

Ford will also pay $14 million in accrued interest from the last interest payment date up to, but excluding, the settlement date.

The carrying values of the tendered notes on Sept. 30 were $399 million for the 2036 notes and $1.544 billion for the 2016 notes.

Following this, $25 million of the 2036 notes and $883 million of the 2016 notes will remain outstanding. After settlement, the carrying values of the remaining notes will be $18 million for the 2036 notes and $688 million for the 2016 notes.

The debt reduction will strengthen the company's balance sheet and lower annualized interest costs by about $180 million.

Including the conversion offers, the recent $3.6 billion prepayment on VEBA note B and net debt reductions over the first nine months of 2010, Ford has reduced its automotive debt by $12.8 billion this year, lowering its annualized interest costs by nearly $1 billion.

"These successful conversion offers represent another significant step toward our goal of reducing our Automotive debt and improving our balance sheet," Ford executive vice president and chief financial officer Lewis Booth said in a press release. "We had previously said that even without the conversion offers, we expected our automotive cash to be about equal to automotive debt by the end of this year, well ahead of our earlier expectations. With the conversion offers, we will be clearly net cash positive by year-end 2010."

Ford launched the conversion offers on Oct. 26, offering to pay a premium in cash to induce the holders to convert the notes to shares. The offers expired at midnight ET on Nov. 23.

Computershare, Inc. was the exchange agent.

Holders whose tendered 2036 notes were accepted will receive 108.6957 shares, $190 in cash, plus unpaid interest for each $1,000 of notes.

Holders whose tendered 2016 notes were accepted will receive 107.5269 shares, $215 in cash, plus unpaid interest for each $1,000 of notes.

Ford is a Dearborn, Mich.-based automaker.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.