DETROIT – Ford Motor plans to raise about $2 billion through an offering of five-year convertible notes, the company announced Tuesday.
The automaker intends to use the net proceeds from the sale for general corporate purposes, including the potential repayment of debt. Ford had $24 billion in debt at the end of last year excluding its financial arm.
The notes will be sold through a private offering to qualified institutional buyers, due in 2026. Ford says the initial aggregate principal amount will be paid back in cash, while any excess amount will also be paid in cash, shares of the stock or a combination of both.
Convertible bonds are debt that can be converted into a specified number of shares, while offering the benefits of a bond, such as interest payments but traditionally at low rates.
Ford expects to grant the initial purchasers of the notes a 13-day option to buy up to an additional $300 million aggregate principal amount of the notes, solely to cover overallotments, if any.
Shares of Ford are up 50% so far this year to $13.20 on plans to accelerate its vehicle electrification efforts under CEO Jim Farley, who took over the helm in October. The company’s market cap currently stands at $51.6 billion.
Source: Business - cnbc.com
