Ford, the world’s second largest car-maker, is preparing to embark on a bumper $18 billion debt fundraising to pay for its corporate overall and deal with its short-term cashflow problems.
The lion’s share of the debt, $15 billion, will be secured against Ford’s assets, including its US factories and all or part of its Volvo and Ford Motor Credit subsidiaries, while a further $3 billion will be unsecured and part will probably be convertible into Ford shares.
The company said the new borrowings were designed to fund its continuing losses, pay for its restructuring and provide a cushion in the event of a recession.
The secured loans will be arranged by Citigroup, Goldman Sachs and JP Morgan.
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The owner of Aston Martin and Jaguar brands earlier this month reported annual losses of $7 billion for the first nine months of the year, together with net debt of $17.8 billion.
It is in the process of axeing 30,000 blue collar workers, and 14,000 white collar staff - about a third of its North American salaried workforce - and closing 14 plants in the US. There has been speculation that the company could sell its Jaguar division in the UK.
When its latest cost-cutting plan was announced in September, Ford’s executive vice-president Mark Fields said: “The simple fact is that the business model that served us in North America for decades no longer works. We must change to a new business model.”
Ford and fellow US automotive manufacturer GM have both been hit by falling sales of their Special Utility Vehicles as Japanese manufacturers such as Toyota have won a greater share of the US market with more fuel-efficient cars.