Word: forde
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There was always a sweet bit of fiction in the notion that Ford (F) was so much better financially than GM (GM) or Chrysler that it could weather the global economic downturn no matter how brutal it turned. All of that magical thinking came to an end as the No.2 American car company said it would have to "restructure" its balance sheet, which has always been short-hand for finding a way to remain in business...
Once domestic vehicle sales began to decrease 30% per month, as they did beginning last fall, and then the rate increased to 40% or more the last three months, there was no way that Ford could finance its losses over the next year. The news that Toyota (TM) and Honda (HMC) might seek assistance from the Japanese government meant that not a single car company in the world would get by on its own. (Read about the CEOs behind Detroit's Big Three...
...Ford proposed a complex plan to retire nearly 40% of its long-term obligations. The company wants to restructure its debt through a combination of a conversion offer by Ford and cash tender offers by Ford Credit. The car company will attempt to get holders of $4.88 billion in convertible notes due in 2036 to move their holdings into the common stock of the company. The debt carries an interest rate of 4.25%. At the same time, Ford Credit will begin a $1.3 billion cash tender offer to purchase certain series of Ford's outstanding unsecured, nonconvertible debt...
...Most large car companies posted more significant unit sales drops in February than analysts expected. GM (GM) only sold 268,737 light vehicles. Three years ago, that would have been its take for the July 4th "cash back" weekend. Ford (F) moved 96,044 units, off 48% from the same month last year. As usual, the Ford PR department did what it could to misdirect and dissemble. Early in its statement about last month's sales, Ford pressed the case for how fabulous it new products are. The most important announcement the company thought it was making was that Ford...
...Ford are finding out, losing 50% of monthly sales isn't risky. It's fatal. If The Big Three are each going to loss $1 billion to $2 billion dollars a month, they might as well do it selling cars to people who are likely to get fired...