Ford Plans $18 Billion in Debt, Some Backed by Plants

[DanielXR8]

Ford Plans $18 Billion in Debt, Some Backed by Plants

Long article so here is the link:

http://www.bloomberg.com/apps/news?p...efer=worldwide

My summary of the article is that Ford need the $18 billion to pay the bills for plant closures and payouts to soon to be ex employees in the US. The company has over $154 billion in debt and can't get a loan anymore, without offering security in the form of profitable assets and operations incase they default. The article says they have been forced to pledge a lot of profitable assets to secure the loan like Ford Credit and Volvo. One analyst says he is not sure this is enough money to get Ford out of trouble, but should buy them some time.

Company shares dropped 2.6% on the news and their rating is likely to drop as they now have fewer assets to secure the company if they need to ever call bankruptcy. They are already rated a bad investment.

This is not good people. Locally I wouldnt be expecting any revolutionary things from Ford Aus after the Orion Falcon, as it reads to me that there won't be any cash for anything much then the essentials in any Ford operations for a long time. Expect reskinning and tweaking of platforms to get as much cash out of every investment as they can.

Dan

I would like to think that with some good products and sound cost cutting, Ford will get out of trouble on the long term.

[4.9 EF Futura]

Would you be lending to FoMoCo unsecured?

Lol, CAA1 (that's SEVEN grades below investment grade!!!) as a rating for unsecured debt is abysmal - unrated companies can get cheaper debt than these junk bonds.

The market is currently implying a 9.7% yield on FoMoCo's debt. That's pretty abysmal in a country where yields on govt debt are priced at about 4.6% long term.

But car manufacturers have made a good living from "buying themselves time".... but going to run out of options sooner or later....

Just another $18 bill to throw on the $150+ bil pile of debt....

[Gadgetman]

I think the writings on the wall. There are really going to be some hard times ahead and hopefully the blue oval will remain in time to come.

[xr8man83]

thats more money then most contries own goodluck FoMoCo

[pecker73]

I think there is only one solution....

I pledge $10 to the 'Save The Blue Oval Fund'

[Bud Bud]

If Ford is continuing to sell off all their assets (like Volvo and Aston Martin or Jaguar) to keep their North American ops alive, is it possible that their blue oval boutique operations like Ford Aus would be vulnerable to the point that a company like Toyota could or want to acquire it?

The only reason I am thinking this way is I can't see Ford staying in business without its North American Company. I would think that it would be the last part of their operations left standing (even if it was their worst performing) after everything else is gone.

Why would they even want to stay in business without their North American ops?

[MYT]

The North American Op's is their biggest burden causing around 85% of the companies total loss at present,so the question should be, why would they want to keep their North American Op's going?

[banarcus]

So the writing is on the wall eh. I'm sure some Japanese company or a consortium of American corporations will probably bail the Ford Motor Company out albeit with very tough conditions than let it die. If Australia tried to keep an Australian company like Ansett alive, then I'm sure the seppos will do the same for FoMoCo.

[XRQTOR]

Originally Posted by Bud Bud

If Ford is continuing to sell off all their assets (like Volvo and Aston Martin or Jaguar) to keep their North American ops alive, is it possible that their blue oval boutique operations like Ford Aus would be vulnerable to the point that a company like Toyota could or want to acquire it?

The only reason I am thinking this way is I can't see Ford staying in business without its North American Company. I would think that it would be the last part of their operations left standing (even if it was their worst performing) after everything else is gone.

Why would they even want to stay in business without their North American ops?

Ford got backed into a corner a long time ago, if they close a plant they need to pay all the employee's wages/super untill they find a new job. Many don't bother looking for a new job, over the year's this has really taken it's toll on the fomoco. If it wasn't for ford credit it's have sunk a long time ago.

[aualright]

So there'll be no hostile takeovers of Ford US in the near future, not with this level of debt. It's one way to keep any wolves at bay..!!

[aualright]

Originally Posted by MYT

The North American Op's is their biggest burden causing around 85% of the companies total loss at present,so the question should be, why would they want to keep their North American Op's going?

Yes...I believe Ford Europe has turned it around financially after recent troubles.

[pecker73]

They haven't actually sold off any assets.. They have mortgaged them, with the hope of getting them back..Its the first time in the 103 year history that they have had to take such drastic measures.

The main assets placed as mortgage security have been US registered Patents and Trademarks and a small portfolio of property (factories and office buildings).

North Amercian operations have publicly stated they don't expect to see a profit before 2009.

Perhaps now might be a good time for Ford Australia to step out on there own?

[Danny]

Yes. So are Ford US Op's now in a worse position than GM US Op's? Because I havent heard much on the abysmal GM US situation for quite a while now.

Although I do hear that VE is not selling like they had thought it would..

[Sapper]

This is sad news. It goes to show that decisions need to be thought through before they are implemented. I agree with the notion that FoMoCo has been backed into a wall. Although ex employess won't get a cent out of a bankrupt company. I wonder how many ex Ford North America employees are going to be looking for jobs now.

With any luck, Ford Australia and Ford Europe (not sure of actual name) will survive in one form or another. Not likely though. I suppose the other interesting question is, how long will GM last for. They are bound by the same agreement.

[MO]

I said it in a previous thread...'it wont be long and Ford and Holden will be built in China'.

[rushing on acid]

sell the north americans the ba series falcon to get em out of the shit

[4.9 EF Futura]

Originally Posted by pecker73

The main assets placed as mortgage security have been US registered Patents and Trademarks

Lol, secured lending against intellectual property... interesting!

[Mr_4.0]

ford will be building all their asia/pacific cars in china within ten years. and the focus is goin to be built in asia pacific within 4 years. instead of importing a complete car. it will help them keep up with the damand of the focus. like they did with escort etc.

[vztrt]

Originally Posted by rushing on acid

sell the north americans the ba series falcon to get em out of the shit

Cant the unions over there woint let us or the numbers would be very small.

I heard (well the source was from Daimler Chrysler of all places) that Ford were taking out a loan of 80Billion, not sure how true this is.

[Falc'man]

Originally Posted by aualright

Yes...I believe Ford Europe has turned it around financially after recent troubles.

Mate, I reckon its Geoff Polites whos made the difference in Europe. They should send him too the States, he'll fix'em. Go Geoffery!