Ford to sell $500 mln of shares to buy back debt
TRAVERSE CITY, Mich., Aug 14 (Reuters) - Ford Motor Co (F.N) will sell up to $500 million of shares to buy back debt from its Ford Motor Credit Co LLC subsidiary, the automaker said on Thursday in a federal regulatory filing.
Ford, which posted an $8.7 billion net loss in its second quarter, has said that improving its balance sheet is one of the four pillars of its turnaround strategy. Goldman Sachs & Co is acting as sales agent for the deal.
"We are selling the common stock on the open market and buying back debt to strengthen the balance sheet," Ford spokesman Bill Collins said.
Earlier this year, Ford abandoned a longstanding goal of returning to profitability in 2009 and has accelerated plans to restructure its North American operations to produce more cars and cut back on slower-selling trucks and SUVs as fuel prices climbed.
Ford and other automakers have been reeling from slumping U.S. auto sales, which hit a 16-year low rate in July, weighted most heavily to the larger trucks and SUVs that had once produced strong profits.
Ford took a $2.1-billion charge in the second quarter to write down the value of leases written by its Ford Motor Credit finance unit, mainly due to a sharper-than-projected decline in the resale values of light trucks.
Ford ended the second quarter with a cash position of $26.6 billion, down $2.1 billion from the first quarter, but executives have said they are confident the automaker has enough liquidity to make it through the downturn.
In the last 12 months, Ford has bought back about $927 million of debt in exchange for equity, Collins said.
Ford had about 2.17 billion shares of common stock and nearly 71 million shares of class B stock as of May 1. The dilutive impact of the move varies depending on the stock and bond prices, but is expected to be in the range of 4 percent.
According to a prospectus filed on Thursday, Ford plans to buy back debt with maturity dates before Jan. 1, 2012 with fixed rates of 5.625 percent to 9.875 percent, or that have floating interest rates.
Ford Credit has outstanding about 14 series of those debt securities totalling about $24.4 billion. (Reporting by David Bailey; Editing by Kim Coghill)
