Ford May Eliminate $11.3 Billion in Debt
Ford continues to prove it’s in the business of staying in business, as it continues to cut production, reduces its number of unionized workers, and eliminates debt.
On Monday, Ford said that its plan to offer debt holders equity in the company to reduce its $28.5 billion in debt was more effective than it had planned. The automaker could eliminate up to $11.3 billion in debt, almost $1 billion more than it had expected.
Despite the fact that it is the only U.S. automaker to not seek federal loans to keep it in business, Ford has continued to take effective action to stay solvent – in many cases moving quicker than its Detroit rivals, which are under the threat of bankruptcy. Last week, Ford was the first automaker to announce that it had won significant concessions from the UAW.
Experts say that the elimination of $11.3 billion in debt will allow Ford to lower its annual interest payments by more than $500 million a year.
GM and Chrysler have yet to announce any success in restructuring their debts in order to keep the federal loans they received late last year and earlier this year. In a recent letter to Treasury Secretary Timothy Geithner, who co-chairs President Obama’s auto task force, GM bondholders voiced their discontent with the way negotiations are preceding and cited concerns that GM’s restructuring efforts would not avert bankruptcy.
Source: The Detroit Free Press