Ford Raises $18 Billion in Financing (mortgaging its assets) - NYT

[Bozita]

http://www.nytimes.com/2006/11/27/business/27cnd-ford.html?hp&ex=1164690000&en=67d5234b124f45f5&ei=5094&partner=homepage

Ford Raises $18 Billion in Financing


By NICK BUNKLEY
Published: November 27, 2006

DEARBORN, Mich., Nov. 27 — For the first time in its 103-year history, the Ford Motor Company is mortgaging its assets, including factories, equipment, office buildings, patents and trademarks, and stakes in subsidiaries like Volvo, in order to raise $18 billion to overhaul itself.

The amount Ford is borrowing exceeds the total market value of all its outstanding stock by more than $2 billion.

Although other auto companies have put up manufacturing equipment and other types of collateral over the years to secure loan, Ford has never done so before. For many decades, its credit was so good that it could easily borrow without pledging assets.

By doing so now, analysts said, Ford is putting its independence at risk. If management fails in its latest attempt to make the ailing company profitable again, Ford may be left with little choice but to find a buyer or merger partner or file for bankruptcy protection.

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[baldguy]

1. Is it going to help them buy new management?

Or are they going to use it to dig a deeper hole?

[phantom power]

3. that question almost answers itself.

[madrchsod]

5. that`s the big issue that i see..

the difference between ford and toyota management is that toyota`s people are just a step ahead of fords. ford has quality cars but they are just a half step behind toyota. the devil is in the details and since i have made parts for both i know this to be true.

[Tight_rope]

6. That was my exact thought when I read this on yahoo this morning.

[madrchsod]

2. it`s a big gamble

and it`s going to take cooperation from everyone in boardroon to the janitor in the factory to pull it off. they make quality cars and trucks in the usa and worldwide but the lack of attention to fine detail company wide has hurt them. the biggest problem in the north american operation is that it is saddled with huge overhead costs due to pensions and healthcare. they need to sell off volvo and jaguar but there`s no one to buy them at the price ford needs to recover their investments. there`s millions of people across the globe who are waiting the outcome of this gamble for their sake i hope they pull it off..

[Auggie]

4. Pensions and health care are killing GM too.

Back in the 60's and 70's they promised the unions practically anything in order to keep their hourly workers pumping out cars.

[PassingFair]

11. Sounds like a job for NATIONAL HEALTHCARE!!

Que the trumpets.
Slice that burden away from corporations NOW!
Everybody wins.

[NOLADEM]

7. JUNK stock.

Their new debt total exceeds their total value and their current income model produces a deficit. JUNK STOCK. JUNK.

That is all.

[Eurobabe]

8. My neighbor took a position with Toyota in AL

rather than wait to see Ford cut his job. Good move for him. My uncle will just take early retirement, the rest of the workforce, methinks is fucked.

[Dover]

9. They are anticipating the coming recession, as stated in the article.

"This refinancing tells us that they see very tough times ahead,” said John Casesa, a veteran automotive analyst with Casesa Strategic Advisers in New York. “Either they’re incredibly conservative, or they’re preparing for an extremely dark outlook.”

Ford, in a statement, said it needs the financing “to address near- and medium-term negative operating-related cash flow, to fund its restructuring, and to provide added liquidity to protect against a recession or other unanticipated events.”

[sarcasmo]

10. I wish they would just sell the Lions.

MR. Illitch, please buy the Lions.

[uncertainty1999]

12. Ford should not have killed their electric cars!

http://www.sonyclassics.com/whokilledtheelectriccar/

I just saw this film. It is EXCELLENT. It shows how there was demand for electric cars that was completely frustrated by the automotive industry. I learned a lot from this film - I had no idea exactly why Bush proposed hydrogen fuel cells in a prior state of the union address, but this movie explains it.

Now I'm slightly off topic, but Ford execs have no one to blame but themselves for this situation. I'll be sick the next time I hear about a big corporate bailout of any of these automakers after seeing this movie.

[Strelnikov_]

15. Like The Ford Engineer Said In The Movie, When People Compared The Capabilities

they chose the ICE vehicles. Thing is, this was back in the late 90's, early 2000's, the last cheap oil blowout sale.

The story told is really the failure of the free market system to respond to major threats that are not immediate. Once the crises hits, the lead time required for the 'market' to respond will have disastrous consequences. A forward looking society would have had either a 5% ZEV mandate, or a tax structure, to guarantee production of a sizeable quantity of ZEV cars. With this base in place, the scale problems would be worked out and the infrastructure in place for when the crises hits in the next few years. Now, we are again starting, not from zero, but damn close.

I do like how they mentioned a couple of times the motive for keeping us hooked on oil. That is, the enormous profits the oil barons will reap once we start to slide down the back side of the production curve in the next few years. Didn't want an alternate to be available too soon once the crises hits, did they.

Now, their myopia may result in a societal collapse.

[Porcupine]

13. To be converted to executive "incentives"- i.e. looting.

The idiots that lent Ford this money might as well wait for the tooth fairy to bring it back to them. Ford has nothing in the pipe that will allow it to retain market share if there is a return to $3.50/gal. gas.

So sad really.

[JCMach1]

14. This is the setup to go Chapter 13 and deny former workers benefits

It's the setup.

Either Ford recovers (maybe), or they bail on the past and obligations...!


:grr:

[yellowcanine]

16. Doesn't that make Ford stock worth ..... not much? Sure, it gives them a bump in cash reserves.

But if the cash gets frittered away in the next couple of years and they haven't returned to profitability, their demise will be swift.