Ford to Offer Stock, Debt

DETROIT (TheStreet -- Ford(F Quote) moved Monday to raise capital, saying it will issue up to $1 billion in new stock and sell $2 billion in convertible debt.

The automaker said it will enter into an equity distribution agreement with selected broker/dealers enabling it to sell shares of common stock, from time to time, for an aggregate offering price up to $1 billion. A sale would be made over several months, not to begin before December.

Ford also said it will offer senior convertible notes valued at approximately $2 billion and due in 2016. Ford will have the option of paying in stock, cash or a combination. It also wants to extend its credit facility.

"These actions support the third pillar of our One Ford plan - finance the plan and improve our balance sheet," said CEO Alan Mulally, in a prepared statement. "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."

In seeking to extend its credit facility from Dec. 15, 2011 to Nov. 30, 2013, Ford has offered its lenders the opportunity to reduce their commitments by 25%, to increase their interest rate margins by 1% to increase fees and to collect an upfront fee.

Lenders must respond by Nov. 18. Already, Ford said, some lenders have indicated they would accept the proposal and extend about $6 billion of revolving commitments and loans to Nov. 30, 2013. Approval is required by lenders holding a majority of the principal amount of the loans and commitments.