Bluecon Posted November 27, 2006 Share Posted November 27, 2006 "In a bet-the-company move, Ford Motor Co. announced this morning that it will put all of its U.S. assets - factories, offices and intellectual property - up as collateral for a multimillion dollar financing deal designed to keep the company solvent." http://detnews.com/apps/pbcs.dll/article?A...PDATE/611270399 Quote Link to comment Share on other sites More sharing options...
theVengineguy Posted November 27, 2006 Share Posted November 27, 2006 Wow, that is bad news. So if it all goes down hill from here, someone else will have ownership of Ford. :titanic: Quote Link to comment Share on other sites More sharing options...
Blueblood Posted November 27, 2006 Share Posted November 27, 2006 Jesus, I don't know much about this kind of thing, but this doesn't sound good to me... Quote Link to comment Share on other sites More sharing options...
silvrsvt Posted November 27, 2006 Share Posted November 27, 2006 More Here: http://news.yahoo.com/s/ap/20061127/ap_on_.../ford_financing The No. 2 U.S. automaker also said the financing will help protect against a recession or other unanticipated events. Ford said a new five-year senior secured revolving credit facility of about $8 billion is intended to replace Ford's existing unsecured credit facilities of $6.3 billion. A senior secured term loan will total about $7 billion, and unsecured capital market transactions will total about $3 billion. Following the transactions, Ford said its "automotive liquidity" will be about $38 billion at year's end. That includes cash, cash equivalents, loaned and marketable securities and available credit facilities. Well while it doesn't seem good, Ford is covering their ass till 2009 and later Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted November 27, 2006 Share Posted November 27, 2006 The big deal here is the $7B loan. The $8B secured credit facility and $3B in unsecured notes are not as interesting. GM has done both already. However, GM has not taken out a $7B loan secured by corporate assets. One wonders what this loan will be used for. Were Ford in such dire circumstances that they would be unable to survive the next year without the $7B, they couldn't've gotten the loan in any case. Banks would rather get their money back, then have to dispose of assets that are of limited value. Nor is the loan for a 'rainy day'. That's what the $8B credit facility is for. You don't borrow $7B 'just in case'. Likely the $7B is to cover additional buy out and plant closing expenses, and the remaining $11B is 'just in case' credit that may not be tapped. Interesting are the various comments noting that Ford is taking on debt, instead of selling assets. It's worth noting that GM sold over $5B in assets this year (stakes in Subaru, Suzuki, and Isuzu), not including the pending 51% stake in GMAC. Ford, not having arms-length assets, is in a different situation. While Ford could've raised a substantial portion of that $7B loan by selling a majority stake in Ford Credit, provided they can repay the loan, borrowing the money instead of selling assets is the smarter long-term move. Quote Link to comment Share on other sites More sharing options...
old_fairmont_wagon Posted November 27, 2006 Share Posted November 27, 2006 for long-term survivability, I believe that what ford Motor company has done is a wise, and also last chance move. Given that the security on this loan pretty much covers most anything they have of significant value in NA, there's not much more that they can do until their fortunes improve. Judging by their current cash burn, and anticipating that we haven't seen the worst quarter yet (I'm thinking that that's going to be Calendar 4Q06 or 1Q07), adding what cash they have now, and what they've secured here, they'd better be able to either turn a profit by mid 08, or to have substantially lower losses by the middle of next year to allow them to stretch their assetts. I believe that Ford can do it, but, there is going to be a lot more unpleasantness between now and then. I really hope for their sake that they don't botch the relaunch/update of the Chicago Trio, and that their update of the F-150 is everything to everyone. We know not to expect anything out of the Focus and Escape updates (except for some new escape interior niceness), and further declines in the Ranger and Panthers (though, with the demise of the Taurus, and Ford's admitted refusal to pimp out the Fusion like the Taurus, the Panther could wind up having a banner year). Quote Link to comment Share on other sites More sharing options...
bb62 Posted November 27, 2006 Share Posted November 27, 2006 The big deal here is the $7B loan. Richard, I agree that this is the big deal. My perspective is that things are worse than they seem and if they don't get the loan now at more favorable rates, in 2 years when the s*** really hits the fan, at least they can extend their recovery plan by about a year to a year and one half. Quite frankly, it's going to take three years at least to turn things around, and mullary is just trying to garner as much in resources as possible for the upcoming storm. Quote Link to comment Share on other sites More sharing options...
Tico Posted November 28, 2006 Share Posted November 28, 2006 Does anyone know did Mully do anything similar when he took over at Boeing? I hope he is simply getting all the bad news out of the way up front and securing financing to get the company through the next product cycle and come up with some real winners. Of course if he fails it's all over for Ford. Only time will tell. Quote Link to comment Share on other sites More sharing options...
g48150 Posted November 28, 2006 Share Posted November 28, 2006 I guess now we know why Ken Leet (Goldman Sachs) was hired. I guess now we know why Robert Rubin (Citibank) left the board of directors. I guess now we're REALLY going to find out what change or die means. Dark Days, my friends, dark days... Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted November 28, 2006 Share Posted November 28, 2006 This certainly does explain why Rubin left the board. Quote Link to comment Share on other sites More sharing options...
pcsario Posted November 28, 2006 Share Posted November 28, 2006 Good. Quote Link to comment Share on other sites More sharing options...
BORG Posted November 28, 2006 Share Posted November 28, 2006 This is indeed going to be a VERY bleak 2007...and probably 2008. For once I'm beginning to believe bankruptcy is a very real possibility. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted November 28, 2006 Share Posted November 28, 2006 Bankruptcy? Nah. With $15B in secured liquidity, foreclosure is more likely than bankruptcy. Quote Link to comment Share on other sites More sharing options...
BORG Posted November 28, 2006 Share Posted November 28, 2006 Bankruptcy? Nah. With $15B in secured liquidity, foreclosure is more likely than bankruptcy. When you loose 5 billion in one quarter, and still have a lot more to loose...15 billion sounds like pocket change. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted November 28, 2006 Share Posted November 28, 2006 Neither you, nor anyone outside Ford, has any idea how much Ford will lose over the next two years. Without a grasp of expected one-time charges, and negative cash flow, it's pretty glib to say, 'it looks pretty bleak', and then bandy around $15B in potential losses. The reality is that if Ford's projections for 2007-2008 included burning through all $18B they've secured, they couldn't've gotten that money in the first place. Quote Link to comment Share on other sites More sharing options...
TheLemon Posted November 29, 2006 Share Posted November 29, 2006 How come money can’t come from the Ford family personally? How come they can’t invest in their company to show their confidence? Let them gamble their own money to back up Ford and be saviors of a dead duck company, a company of yesteryear. "We all have to change, and we all have to sacrifice" .... Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted November 29, 2006 Share Posted November 29, 2006 How come money can’t come from the Ford family personally?How come they can’t invest in their company to show their confidence? Let them gamble their own money to back up Ford and be saviors of a dead duck company, a company of yesteryear. "We all have to change, and we all have to sacrifice" .... Being the largest shareholder, I would say the Ford family has quite a LOT invested in the fate of the company, financially speaking. Quote Link to comment Share on other sites More sharing options...
evok Posted November 29, 2006 Share Posted November 29, 2006 Neither you, nor anyone outside Ford, has any idea how much Ford will lose over the next two years. Without a grasp of expected one-time charges, and negative cash flow, it's pretty glib to say, 'it looks pretty bleak', and then bandy around $15B in potential losses. The reality is that if Ford's projections for 2007-2008 included burning through all $18B they've secured, they couldn't've gotten that money in the first place. Just announced today, 17B cash flow demand next year. So much for Ford having 20+B in the bank and that being enough as per old discussions. Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted November 29, 2006 Share Posted November 29, 2006 Just announced today, 17B cash flow demand next year. So much for Ford having 20+B in the bank and that being enough as per old discussions. With the recent loan agreement, it has been said that it would push Ford's cash and cash equivalents to around $38B if I recall correctly, so even burning through a good chunk of that they will still have significant cash on hand for continued operations in the years to come. Quote Link to comment Share on other sites More sharing options...
silvrsvt Posted November 29, 2006 Share Posted November 29, 2006 Also doesn't account for possible profits from European/South American/Asian operations Quote Link to comment Share on other sites More sharing options...
evok Posted November 29, 2006 Share Posted November 29, 2006 (edited) With the recent loan agreement, it has been said that it would push Ford's cash and cash equivalents to around $38B if I recall correctly, so even burning through a good chunk of that they will still have significant cash on hand for continued operations in the years to come. Come again - they just announced that they morgaged the name Ford, its script, the Mustang prancing horse and other stuff to borrow 18B and will spend 17B in the next 12 - 24 months. That is cash spent. Let's step back and rationalize that for a second. http://secfilings.nasdaq.com/filingFramese...2F2006&pdf= Edited November 29, 2006 by evok Quote Link to comment Share on other sites More sharing options...
IPITYDAFOOL VIRUSFREE Posted November 29, 2006 Share Posted November 29, 2006 Come again - they just announced that they morgaged the name Ford, its script, the Mustang prancing horse and other stuff to borrow 18B and will spend 17B in the next 12 - 24 months. That is cash spent. Let's step back and rationalize that for a second. http://secfilings.nasdaq.com/filingFramese...2F2006&pdf= :hyper: :hyper: If they sell those Euro Products over here sooner than later. Cool Post, those filings are enuff for me to see Ford has A PLAN. GET THAT FOCUS OVER HERE YESTERDAY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted November 30, 2006 Share Posted November 30, 2006 (edited) Come again - they just announced that they morgaged the name Ford, its script, the Mustang prancing horse and other stuff to borrow 18B and will spend 17B in the next 12 - 24 months. That is cash spent. Let's step back and rationalize that for a second. http://secfilings.nasdaq.com/filingFramese...2F2006&pdf= Cash flow demand doesn't mean that all of that cash will vaporize. It simply means that they will need that much liquidity to conduct business over the next 12 months. Much of it will be offset the form of revenues from continued operations. Now if Ford claims $17B in LOSSES in the next 12 months, that would be another story. As someone else pointed out elsewhere, if Ford was planning to lose $17B in the next year, who in their right mind would finance this loan for them? Edited November 30, 2006 by NickF1011 Quote Link to comment Share on other sites More sharing options...
evok Posted November 30, 2006 Share Posted November 30, 2006 "During the period 2007 through 2009, we expect cumulative Automotive operating-related cash outflows of about $10 billion and cumulative cash expenditures for restructuring actions of about $7 billion. More than half of this $17 billion cash outflow is expected to occur in 2007. This cash outflow primarily reflects substantial operating losses in our Automotive sector through 2008 and cash expenditures incurred in connection with personnel separations. It also reflects our expectation to continue to invest in new products throughout this period at about the same level as we have during the past few years, or approximately $7 billion annually." Quote Link to comment Share on other sites More sharing options...
pcsario Posted November 30, 2006 Share Posted November 30, 2006 (edited) Come again - they just announced that they morgaged the name Ford, its script, the Mustang prancing horse and other stuff to borrow 18B and will spend 17B in the next 12 - 24 months. That is cash spent. Let's step back and rationalize that for a second. http://secfilings.nasdaq.com/filingFramese...2F2006&pdf= Edited November 30, 2006 by pcsario Quote Link to comment Share on other sites More sharing options...
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