did not take a government bailout, but it is moving quickly to resolve the same issues that the Treasury is requiring the remaining Detroit automakers to address.
On Wednesday, Ford said it will use a combination of its cash and equity as well as Ford Credit cash to retire up to $10.4 billion of debt in a move to reduce obligations and future interest expense.
"The debt restructuring plan we are announcing today is a critical step in Ford's overall transformation," said CEO Alan Mulally, in a prepared statement. "We are continuing to work with all of our stakeholders -- including employees, dealers and suppliers -- to secure Ford's future in this difficult economic environment."
Last week, Ford reached a tentative deal with the United Auto Workers to reduce labor costs and use stock to pay up to 50% of its obligation to the Voluntary Employee Beneficiary Association health care trust. Ford said Wednesday that the UAW deal requires it to pursue "restructuring actions with other stakeholders, including meaningful debt reduction over time consistent with requirements applicable to its domestic competitors under their government-sponsored restructurings."
are still seeking similar deals with the UAW and are also still negotiating with debt holders.
Ford's debt-restructuring effort has three components.
The company launched a conversion effort related to 4.25% senior convertible notes due in 2036, offering to pay a cash premium to induce holders to convert to common shares. The notes, issued in 2006, have an outstanding principal value of $4.9 billion.
Ford Credit has commenced a $1.3 billion cash tender offer for Ford's unsecured nonconvertible debt securities. Ford would retire up to $4.2 billion of this debt, of which $8.9 billion is outstanding.
Also, Ford Credit has commenced a $500 million cash tender offer for Ford's senior secured term loan debt, of which $6.9 billion is outstanding. About $1.4 billion could be retired.