Ford Seeks Financing For Restructuring

Automaker pledges assets as collateral.

Ford Motor Co. is offering its assets as collateral to obtain loans totaling $18 billion for its restructuring efforts, the company said in a Nov. 27 statement.

The transactions, which are expected to close before Dec. 31, also will be used to address near- and medium-term negative operating-related cash flow and to protect itself against a recession or other unexpected events. The deal would mark the first time the struggling Dearborn, Mich., company has used collateral for loans, Ford spokeswoman Becky Sanch said in a Nov. 27 Reuters news service story.

The financing transactions include a new five-year senior secured revolving credit facility of about $8 billion that would replace Fords existing unsecured credit facilities of $6.3 billion , a senior secured term loan of about $7 billion, and unsecured capital market transactions of an estimated $3 billion, which may include unsecured notes convertible into Ford common stock.

Citigroup Corporate and Investment Banking, Goldman Sachs Credit Partners L.P. and J.P. Morgan Securities Inc. are arranging the senior secured credit facilities. Once the transactions are complete, Ford expects to have automotive liquidity of $38 billion by the end of 2006.

Fords Way Forward restructuring plan includes plant closures, workforce reductions and new-product investments.
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