Ford continues to struggle globally by posting losses in moribund European economies, and – surprisingly – the growth markets of Asia Pacific and Africa.
Ford Motor Company (NYSE: F) said today it that Ford’s revolving lenders have agreed to extend the maturity of commitments totaling $9 billion to 30 November 2015 from the same date in 2013.
In a separate transaction, Ford announced its first renminbi-denominated bond issue aimed at RMB investors in Hong Kong, Singapore and elsewhere outside the United States, with total proceeds of RMB 1 billion or about USD $158 million. Ford is losing money in the Asia-Pacific region. In the fourth quarter of 2011, Ford Asia Pacific Africa reported a pre-tax operating loss of $83 million, compared with a profit of $23 million a year ago. (See Ford Posts 2011 Profit of $8.8 Billion, Up $1B from 2010)
Year-to-date Ford China sales at 71,000 are down from 85,000 last year, a 15% decline in the world’s largest auto market. This is not a good trend since Ford and its Changan partners opened a second vehicle assembly plant in Chongqing last month, bringing its passenger vehicle production capacity to 600,000 units annually with four plants. Three more plants are under construction. (See Ford China Sales Up 28% in February, But Down 15% YTD)
Before the revolving credit transaction today, lenders to Ford had commitments order viagra from au under the revolving credit facility totaling $8.9 billion that were scheduled to mature on Nov. 30, 2013, of which approximately $130 million are used for letters of credit. As of today, about $300 million of commitments will mature on 30 November 2013.
Collateral pledged to Ford’s lenders under the revolving credit facility will be released when Ford’s senior long-term, unsecured debt receives investment grade ratings from at least two of the three major rating agencies.
The challenge Ford faces with the ratings agencies, which have its debt as junk or below investment grade, is complicated by promises previously made in Europe and North America about retirement benefits. Worldwide Ford has $15.4 billion in underfunded pension liabilities, including $9.4 billion in the U.S. Ford admits it will be years before it can solve the long-standing problem.
In addition to the increase in the total amount of commitments and extending the maturity date, revolving lenders approved modifications to the revolving credit facility, including the elimination of the limitation on debt prepayments and dividends upon the release of collateral.
The Board of Directors also declared a second quarter dividend of 5 cents per share on the company’s Class B and common stock. This is the same dividend paid in the first quarter of 2012. The second quarter dividend is payable on 1 June 2012 to shareholders of record on May 2, 2012.
