Ford to mortgage the farm

Nov 27, 12:15 PM EST

> >Ford to get $18 billion in financing=20 > >By DAVID RUNK=20 >Associated Press Writer > >=20 >AP Photo/DAVID ZALUBOWSKI=20 >=20 >Business Video=20 >=20 >=20 >=20 >=20 >=20 >=20 >Advertisement > =20 >=20 > =20 >DETROIT (AP) -- Ford Motor Co. said Monday it plans to get about $18 >billion in financing to help fund its restructuring and help make up for >anticipated losses in its automotive operations over the next two years. > >The No. 2 U.S. automaker also said the financing - with its domestic >plants and other automotive assets used as collateral - will help protect >against a recession or other unanticipated events. > >Analysts said it makes the possibility of Ford selling its finance arm >less likely but could support bigger restructuring efforts. > >Ford said a new five-year senior secured revolving credit facility of >about $8 billion is intended to replace Ford's existing unsecured credit >facilities of $6.3 billion. A senior secured term loan will total about $7= >billion, and unsecured capital market transactions will total about $3 bil= lion. > > =20 >=20 > =20 >The revolving credit and term loan will be secured by liens on U.S. >manufacturing facilities, substantially all of the company's other >domestic automotive assets, certain intellectual property, stock in >certain subsidiaries - including Ford Motor Credit Co. and Volvo - and up >to $4 billion in cash. > >Ford spokeswoman Becky Sanch said it was the first time the company had >used assets such as plants to secure financing. Earlier this month, Ford >had said it was near an announcement on such a deal. > >Ford shares fell 20 cents, or 2.4 percent, to $8.32 in Monday morning >trading on the New York Stock Exchange. > >Following the transactions, Ford said it will have about $38 billion at >year's end to fund automotive operations. That includes cash, cash >equivalents, loaned and marketable securities and available credit facilit= ies. > > Latest News=20 >Ford to get $18 billion in financing >SEC asks Ford about Syria, Sudan > >GM raises Russian sales forecast for '06 > >Kerkorian seeks to boost MGM stake > >GM aims to grab 10 pct. of Asian market > >Ford Motor Co. reduces reported losses > >=20 >=20 >=20 >=20 >Buy AP Photo Reprints=20 >=20 >=20 >=20 >=20 >=20 > >=20 >=20 > =20 >"The additional liquidity should be sufficient to give Ford the ability to= >fund itself for several years, even with considerable negative cash flow,"= >Rod Lache, an analyst for Deutsche Bank, said in a note to investors. > >Dearborn-based Ford lost $7 billion during the first nine months of the >year and has said it won't return to profitability until 2009. > >The company has offered buyouts and early retirement packages to all >75,000 U.S. production workers and plans to shutter 16 plants to reduce >manufacturing capacity to match lower demand for its products as part of >its "Way Forward" restructuring plan. > >Some Wall Street analysts have questioned why the sale of part of Ford >Motor Credit wasn't part of its restructuring update announced in >September. Ford has said it didn't plan to sell its finance arm. > >At least two analysts said Monday that using assets such as Ford Motor >Credit to back the secured loans makes it less likely that Ford will sell >the credit arm. > >Ford expects the transactions to close before Dec. 31. The senior secured >credit facilities will be arranged by Citigroup Corporate and Investment >Banking, Goldman Sachs Credit Partners L.P. and J.P. Morgan Securities Inc=
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George Orwell
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