Ford Motor Co., the second-largest U.S. automaker, plans to obtain $18 billion in new loans to fund its operations amid losses at its North American unit.
The new debt includes $8 billion in a secured credit line which will replace an existing unsecured $6.3 billion loan, Ford said in a statement. The Dearborn, Michigan-based company also plans to get a new $7 billion secured term loan, and said it expects to complete the financing before Dec. 31.
Ford must raise cash to cover the costs of cutting jobs and closing factories at its North American automotive unit, which has posted losses in eight of the past nine quarters. The automaker has lost $6.99 billion in the first nine months of 2006.
``They realize they're in worse shape than they thought and it's going to take a long time to fix this,'' said Shelly Lombard, a Montclair, New Jersey-based debt analyst at Gimme Credit Publications.
Ford is using its U.S. plants, other U.S. automotive assets and ``all or a portion'' of units such as Ford Motor Credit Co. and Volvo as collateral. JPMorgan Chase & Co., Citigroup Inc. and Goldman Sachs Group Inc. are arranging the financing, Ford said.
This is the first time Ford has used collateral for loans, spokeswoman Becky Sanch said in an interview.
More photos of this and other cars in our galleries...
2006 Beijing Auto China Show Photo Gallery
And be sure to stay tuned for our coverage of the upcoming LA Auto Show starting on November 29th.
AutoSpies.com Photo Galleries
Read Article