Ford to raise 3 bln dlrs with stocks

November 03, 2009 02:09:28 PM

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Ford Motor Co. announced plans Monday to raise up to three billion dollars through an offering of new stock and convertible notes, saying the move would improve its balance sheet and liquidity.

The announcement came just hours after the auto giant posted surprise earnings of nearly a billion dollars in the third quarter and said it was on track to become "solidly profitable" by 2011 after years of painful losses.

Ford said it intends to enter into an equity distribution agreement with certain brokers to offer up to one billion dollars in common stock "from time to time" starting as early as December.

The company said it also plans to sell some two billion dollars' worth of convertible notes due in 2016. The notes could be converted to common stock or cash at Ford's option.

The Detroit firm said it also aimed to propose to its lenders a plan to extend the maturity of its debts from 2011 to 2013 in exchange for reduced lender commitments and increased interest margins and fees.

"These actions support the third pillar of our One Ford plan -- finance the plan and improve our balance sheet," said Alan Mulally, Ford's president and chief executive.

"We expect the moves will enhance Ford's automotive liquidity and over time reduce the company's debt burden, providing an additional cushion given the still uncertain state of the economy."

Ford's debt load after four years of restructuring has hit 26.9 billion dollars.

Ford has also managed to improve its cash position to 23.8 billion dollars, based on results reported Monday.