Ford launches major debt restructuring
Ford Motor Co on Wednesday announced a plan to cut its $25.8 billion in automotive debt by about 40 percent by offering creditors cash and new shares as it looks to slash financing costs at a time of plunging sales and tight credit.
Ford shares declined 15 percent after the announcement of the plan to cut its debt by up to $10.4 billion, which could increase the number of shares outstanding.
But the bonds of Ford’s finance arm jumped after the launch of the tender offer. Ford Motor Credit Co’s 7.375 percent bond due 2011 rose 3.5 cents to 62 cents on the dollar, according to MarketAxess.
Following Ford’s announcement, Standard & Poor’s cut its corporate credit rating on Ford to “CC” from “CCC+”, calling it a distressed debt exchange, while Fitch said it will not affect the current rating of “CCC”.
Fitch said it would view the offers as “a mild positive” to the company’s credit profile.
[Article originally posted on Reuters] Continue reading