Biker16 Posted July 31, 2007 Share Posted July 31, 2007 FORD ANNOUNCES NUMBER OF PREMIUM SHARES TO BE PAID IN ITS CONVERSION OFFER DEARBORN, Mich., July 30, 2007 – Ford Motor Company [NYSE: F] (“Ford”) today announced the number of shares of Ford common stock that will constitute the premium to be paid in connection with its conversion offer related to the outstanding 6.50% Cumulative Convertible Trust Preferred Securities of Ford’s wholly owned subsidiary trust, Ford Motor Company Capital Trust II. The premium represents the amount of shares of Ford common stock determined by dividing (i) $14.25 by (ii) $8.1576, the volume-weighted average of the reported sales prices on the New York Stock Exchange of Ford common stock during the three trading-day period of July 25, July 26, and July 27, 2007. Accordingly, each trust preferred security validly tendered and accepted for conversion will be converted into an aggregate of 4.5717 shares of Ford's common stock, which includes the premium of 1.7468 shares and 2.8249 shares of Ford common stock issuable pursuant to the conversion terms of the trust preferred securities. On July 2, 2007, Ford commenced an offer to pay a premium to holders of any and all trust preferred securities who elect to convert their trust preferred securities to shares of Ford common stock subject to the terms of the offer. The offer is scheduled to expire at 5:00 p.m., New York City time, on Tuesday, July 31, 2007, unless extended or earlier terminated, and is expected to settle on Friday, August 3, 2007. If all trust preferred securities that were outstanding as of the commencement of the offer were validly tendered and accepted for conversion, Ford would issue an aggregate of 457,163,141 shares of Ford common stock, including approximately 282,485,762 shares pursuant to the conversion terms of the trust preferred securities, plus an aggregate premium of 174,677,379 shares of Ford common stock. The conversion offer is being made pursuant to an offering circular dated July 2, 2007, as amended on July 13, 2007, and related documents. The completion of the offer is subject to conditions described in the conversion offer documents. Subject to applicable law, Ford may waive the conditions applicable to the offer or extend, terminate or otherwise amend the offer. This press release is not an offer to convert, or a solicitation of an offer to convert, any trust preferred securities. The conversion offer is being made only on the terms and subject to the conditions described in the offering circular and related documents, which have been distributed to holders of trust preferred securities, who are advised to read such documents because they contain important information. Copies of the offering circular and related documents have been filed with the Securities and Exchange Commission as exhibits to a Schedule TO, as amended, and are available for free at the Commission’s web site at www.sec.gov. Holders of trust preferred securities may address questions about the conversion offer or make requests for copies of the offering circular and related documents for free to Georgeson, Inc., the information agent for the conversion offer, by calling toll-free at 888-605-7541. Ford Motor Company Capital Trust II, a statutory business trust, was formed in 2001 under the laws of the state of Delaware and is a wholly-owned subsidiary of Ford Motor Company. Ford Motor Company, a global automotive industry leader based in Dearborn, Mich., manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company’s core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo and Mazda. The company provides financial services through Ford Motor Credit Company. Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted July 31, 2007 Share Posted July 31, 2007 In short, Ford is offering a bond-to-stock conversion to securities holders who currently own Ford debt. At least I think that's what I got out of it. Quote Link to comment Share on other sites More sharing options...
g48150 Posted July 31, 2007 Share Posted July 31, 2007 Stock Price <= Bond Yield (even at junk) == BUY OUR STOCK!!! Just need the cash, not the long term interest. Stock is easy to reissue post-bankrupt, bonds have to go through the bankruptcy court. Quote Link to comment Share on other sites More sharing options...
wescoent Posted July 31, 2007 Share Posted July 31, 2007 Stock Price <= Bond Yield (even at junk) == BUY OUR STOCK!!! Just need the cash, not the long term interest. Stock is easy to reissue post-bankrupt, bonds have to go through the bankruptcy court. Didn't know you had a degree in finance too. Virtually all corporate bonds are convertible, meaning when the bonds are issued, the company agrees to allow holders of the bonds to convert them to stock at a point in the future. Ford is simply declaring that for anyone who wants to convert now, they will covert at the rate of about $8.16 per share, which was a trough in the stock price. Ford wants buyers to convert, because they'd prefer to let buyers make money off appreciation in stock price, not coupon payments. If Ford waited, it might not be able to convert at such an attractive rate for bond holders, since they expect the stock price to skyrocket. Quote Link to comment Share on other sites More sharing options...
g48150 Posted August 1, 2007 Share Posted August 1, 2007 (edited) Didn't know you had a degree in finance too. Virtually all corporate bonds are convertible, meaning when the bonds are issued, the company agrees to allow holders of the bonds to convert them to stock at a point in the future. Ford is simply declaring that for anyone who wants to convert now, they will covert at the rate of about $8.16 per share, which was a trough in the stock price. Ford wants buyers to convert, because they'd prefer to let buyers make money off appreciation in stock price, not coupon payments. If Ford waited, it might not be able to convert at such an attractive rate for bond holders, since they expect the stock price to skyrocket. Well like they say, when in Rome, pray to god you don't get the bill!!! Either way, cash is king, look at Kmart, for example, reissued stock like they were printing money, Delphi should be doing this shortly, too. The bondholders actually got something out of the deal, the 401(k) holders (with large if not all portions in company common stock) on the other hand... Money is for communists anyway right? Edited August 1, 2007 by g48150 Quote Link to comment Share on other sites More sharing options...
theoldwizard Posted August 1, 2007 Share Posted August 1, 2007 ... since they expect the stock price to skyrocket. Perhaps long term. The net short term effect of issuing more stock is to dilute the value of all stock and the price will go probably go down. Quote Link to comment Share on other sites More sharing options...
wescoent Posted August 1, 2007 Share Posted August 1, 2007 Perhaps long term. The net short term effect of issuing more stock is to dilute the value of all stock and the price will go probably go down. I doubt Ford is issuing more shares of stock. Ford owns a certain number of its own shares, uses them for debt conversions such as these. Stock issuances involves paying investment bankers, which given their fees, would not be cost effective compared to just using existing stock. Quote Link to comment Share on other sites More sharing options...
630land Posted August 2, 2007 Share Posted August 2, 2007 Well, it definitely means no C1 Focus is coming "tomorrow' as was stated a few years ago bye some wishful thinkers. Quote Link to comment Share on other sites More sharing options...
theoldwizard Posted August 2, 2007 Share Posted August 2, 2007 I doubt Ford is issuing more shares of stock. Ford owns a certain number of its own shares, uses them for debt conversions such as these. Stock issuances involves paying investment bankers, which given their fees, would not be cost effective compared to just using existing stock. From the original post Ford would issue an aggregate of 457,163,141 shares of Ford common stock, including approximately 282,485,762 shares pursuant to the conversion terms of the trust preferred securities, plus an aggregate premium of 174,677,379 shares of Ford common stock Sounds to me like a big chunk is still "new'. Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted August 2, 2007 Share Posted August 2, 2007 Well, it definitely means no C1 Focus is coming "tomorrow' as was stated a few years ago bye some wishful thinkers. What does a bond conversion offering have to do with the C1 Focus? Quote Link to comment Share on other sites More sharing options...
pcsario Posted August 2, 2007 Share Posted August 2, 2007 (edited) The net short term effect of issuing more stock is to dilute the value of all stock and the price will go probably go down. I concur. Edited August 2, 2007 by pcsario Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted August 2, 2007 Share Posted August 2, 2007 I concur. That's only IF they are issuing more stock. Someone outlined above how this very well might not be the case. Quote Link to comment Share on other sites More sharing options...
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