Ford to raise $3.3 billion in stock, debt sales

DEARBORN, Mich. - Ford Motor Co. said Monday it will ask its lenders for extra time to repay at least some of the $10.1 billion borrowed under a line of credit, and will sell about $3.3 billion in stock and convertible debt to raise more cash.

Ford President and CEO Alan Mulally said that over time the moves will "reduce the company's debt burden, providing an additional cushion given the still uncertain state of the economy." The news came after Ford, the only Detroit automaker to dodge direct government aid and bankruptcy court, reported a surprise quarterly profit of nearly $1 billion and said it will be profitable by 2011.

Ford said it will pay down 25 percent of the revolving credit line and is offering higher interest and fees on its remaining debt if lenders would agree to push back the date the credit line is due by two years to Nov. 30, 2013.

In a filing with the Securities and Exchange Commission earlier this year, Ford listed borrowings under its secured revolving loan due in 2011 at about $10.1 billion and said the loan bears interest at 2.25 percent above the London interbank offered rate. It had borrowed the $10.1 billion on Feb. 3, "due to concerns about the instability in the capital markets and the uncertain state of the global economy," Ford said in the Aug. 5 filing.

Some lenders "have indicated that they intend to accept Ford's proposal" and extend about $6 billion worth of loans to 2013, Ford said Monday, but didn't identify them.

Ford is offering to add 1 percentage point to the interest on the debt and pay higher fees as well as an upfront fee. It is asking lenders to respond to its proposal by Nov. 18.

Ford plans to offer up to $2.3 billion in senior convertible notes due in 2016, which would be convertible into stock or cash at Ford's discretion. The automaker also will sell up to $1 billion worth of shares over the next several months, starting in December.

The move's potential dilution to current stockholders sent Ford shares down 25 cents, or 3.3 percent, to $7.33 in aftermarket trading, having closed earlier up 58 cents, or more than 8 percent, at $7.58 on the day.

Barclays Capital, BofA Merrill Lynch, Citi, Deutsche Bank Securities, Goldman Sachs & Co., J.P. Morgan, Morgan Stanley and RBS are acting as joint book-running managers of the senior convertible notes offering. BNP Paribas and HSBC also will be included in the underwriting syndicate for the offering.

Ford on Monday reported a third-quarter profit of $997 million, as it cut costs by more than $1 billion and its key North American car and truck division recorded its first quarter in the black since early 2005. However, Ford's debt jumped $800 million from the second quarter to $26.9 billion.

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