Ford wraps restructuring plan, lowers debt by $9.9 billion

By Angela McDaniels

Tacoma, Wash., April 6 - Ford Motor Co. said it completed its restructuring plan, reducing its debt by $9.9 billion from $25.8 billion at Dec. 31 and lowering its annual cash interest expense by more than $500 million.

The plan included a tender offer by Ford Motor Credit Co. for Ford's $8.9 billion principal amount of unsecured, nonconvertible debt securities, a conversion offer for Ford's $4.88 billion principal amount of 4.25% senior convertible notes due Dec. 15, 2036 and a $500 million Dutch auction tender offer for Ford's $6.9 billion principal amount of senior secured term loan debt.

The company announced the results of the tender offer for the notes and the conversion offer on April 6. The results of the term loan offer were announced on March 23.

Notes tender offer

Ford Motor Credit said it received tenders for $3.4 billion of Ford's unsecured, nonconvertible debt securities during the tender offer, which expired at 9 a.m. ET on April 3.

The company expects to issue $1.1 billion of notes under the offer, according to a Ford news release.

Following settlement of the offer on April 8, about $5.5 billion of notes will remain outstanding.

Holders tendered the following notes into the offer:

• $155.63 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;

• $120.94 million of its $481.55 million 6½% debentures due Aug. 1, 2018;

• $92.09 million of its $177.92 million 8 7/8% debentures due Jan. 15, 2022;

• $86.35 million of its $295 million 7 1/8% debentures due Nov. 15, 2025;

• $56.63 million of its $250 million 7½% debentures due Aug. 1, 2026;

• $20.71 million of its $124.34 million 6 5/8% debentures due Feb. 15, 2028;

• $103.49 million of its $741.28 million 6 5/8% debentures due Oct. 1, 2028;

• $171.2 million of its $431.67 million 6 3/8% debentures due Feb. 1, 2029;

• $231.92 million of its $383.22 million 8.9% debentures due Jan. 15, 2032;

• $6.97 million of its $11.25 million 9.95% debentures due Feb. 15, 2032;

• $97.25 million of its $690 million 7½% notes due June 10, 2043;

• $76.89 million of its $149.54 million 7¾% debentures due June 15, 2043;

• $39.78 million of its $438.1 million 7.4% debentures due Nov. 1, 2046;

• $26.94 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.

The company will pay 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, which was 5 p.m. ET on March 19.

The acquired notes will be retired.

Ford Motor Credit offered to purchase the notes for a total purchase price of up to $1.3 billion. If the total purchase price for the tendered notes had exceeded this $1.3 billion cap, Ford Motor Credit would have accepted notes for purchase in accordance with the notes' acceptance priority level.

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

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. were the dealer managers. Global Bondholder Services Corp. (866 470-4300 or 212 430-3774) was the information agent.

Conversion offer

Holders tendered approximately $4.3 billion principal amount of convertibles under Ford's conversion offer, which expired at 9 a.m. ET on April 3.

Holders will receive 108.6957 shares of Ford common stock plus an $80 cash premium for each $1,000 principal amount of convertibles.

Ford will also pay accrued interest on the convertibles up to but excluding the settlement date, which is April 8.

In total, the company will issue about 468 million shares and pay $344 million in cash for the convertibles, excluding interest.

Upon settlement of the conversion offer, about $579 million of convertibles will remain outstanding.

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

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.

After the offer began, Ford Motor Credit decided to increase the amount of cash it would use for the term loan offer to $1 billion from $500 million.

This allowed 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.

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

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

Ford is a Dearborn, Mich.-based automaker.

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