Ford to buy $2.2 billion of term loans under oversubscribed tender offer; other offers to close April 3

By Angela McDaniels

Tacoma, Wash., March 23 - Ford Motor Co. said the $500 million Dutch auction tender offer for its $6.9 billion senior secured term loan debt is oversubscribed, and Ford Motor Credit Co. has so far received tenders for $3.4 billion of Ford's $8.9 billion unsecured, non-convertible debt securities.

The tender offers are part of a plan that began on March 4 to restructure Ford debt through a combination of tender and conversion offers. The plan also includes a conversion offer for Ford's $4.88 billion 4.25% senior convertible notes due Dec. 15, 2036.

Term loan offer

Under the Dutch auction tender offer for the term loans, lenders were invited to submit bids to sell their debt for between 38% of par and 47% of par. The offer expired on March 19.

Ford Motor Credit decided to increase the amount of cash it would use for the term loan offer to $1 billion from $500 million, according to a company news release.

This will allow it to purchase $2.2 billion principal amount of Ford's term loan debt at a price of 47% of par, which represents all term loan debt tendered at or below the clearing price.

All term loan debt acquired by Ford Motor Credit will be distributed to its parent, Ford Holdings LLC, and forgiven, Monday's news release stated.

Blackstone Advisory Services LP (212 583-5400), Citigroup, Goldman Sachs Credit Partners LP and JPMorgan were the auction agents.

Notes tender offer

Ford said the $3.4 billion principal amount of notes tendered as of the early tender date, 5 p.m. ET on March 19, will result in a total purchase price of about $1.1 billion.

Additional notes may be tendered until 9 a.m. ET on April 3.

Notes tendered as of the early tender date include:

• $154.74 million of Ford's $490 million 9½% guaranteed debentures due June 1, 2010;

• $1.9 billion of its $3.7 billion 7.45% Globls due July 16, 2031;

• $119.44 million of its $481.55 million 6½% debentures due Aug. 1, 2018;

• $91.82 million of its $177.92 million 8 7/8% debentures due Jan. 15, 2022;

• $85.71 million of its $295 million 7 1/8% debentures due Nov. 15, 2025;

• $55.96 million of its $250 million 7½% debentures due Aug. 1, 2026;

• $19.88 million of its $124.34 million 6 5/8% debentures due Feb. 15, 2028;

• $102.60 million of its $741.28 million 6 5/8% debentures due Oct. 1, 2028;

• $170.68 million of its $431.67 million 6 3/8% debentures due Feb. 1, 2029;

• $231.76 million of its $383.22 million 8.9% debentures due Jan. 15, 2032;

• $6.95 million of its $11.25 million 9.95% debentures due Feb. 15, 2032;

• $95.75 million of its $690 million 7½% notes due June 10, 2043;

• $76.67 million of its $149.54 million 7¾% debentures due June 15, 2043;

• $39.53 million of its $438.1 million 7.4% debentures due Nov. 1, 2046;

• $26.68 million of its $208.11 million 9.98% debentures due Feb. 15, 2047; and

• $196.77 million of its $339.03 million 7.7% debentures due May 15, 2097.

Ford Motor Credit is offering to purchase the notes for a total purchase price of up to $1.3 billion. If the total purchase price for the tendered notes exceeds this $1.3 billion cap, Ford Motor Credit will accept notes for purchase in accordance with the notes' acceptance priority level.

The acceptance priority level is 1 for the 9½% guaranteed debentures, 2 for the 7.45% Globls and 3 for the remaining notes.

All notes with a higher acceptance priority level will be accepted before any notes with a lower acceptance priority level are accepted. If there are enough remaining funds to purchase some, but not all, of the notes of an applicable acceptance priority level, the amount of notes purchased in that priority level will be pro rated.

The company is offering 55% of par for the 9½% guaranteed debentures and 30% of par for the remaining notes. In each case, the payout includes a 3% early tender premium for notes tendered by the early tender date.

The acquired notes will be retired.

Goldman, Sachs & Co. (800 828-3182 or 212 357-4692), Blackstone Advisory Services LP (212 583-5400), Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. are the dealer managers. Global Bondholder Services Corp. (866 470-4300 or 212 430-3774) is the information agent.

Conversion offer

Under the conversion offer, Ford is offering to pay a premium in cash to holders of its 4.25% convertibles who convert their notes into shares of Ford's common stock.

The convertibles are currently convertible into Ford common stock at a conversion rate of 108.6957 shares per $1,000 principal amount. At Ford's closing stock price of $1.87 (NYSE: F) on March 4, those shares had a value of $203.26.

Holders who elect to convert their convertibles will receive the 108.6957 shares plus $80 in cash for each $1,000 principal amount of convertibles.

The conversion offer will expire at 9 a.m. ET on April 3.

Georgeson, Inc. (800 457-0759) is the information agent for the conversion offer.

Neither the conversion offer nor either of the tender offers is contingent on the completion of any other offer, a previous news release noted.

Trust preferreds

As previously reported, Ford also announced its intent to defer future interest payments on its 6.5% junior subordinated convertible debentures due Jan. 15, 2032, which will result in the deferral of the quarterly distributions on the 6.5% cumulative convertible trust preferred securities of Ford Motor Company Capital Trust II for the same period.

The deferral will begin with the April 15 payment date. The company is allowed to defer payments for up to 20 consecutive quarters.

Ford is a Dearborn, Mich.-based automaker.

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