"This is Mammoth" - FORD BETS THE HOUSE.

[adrenaline]

All assets on the line to secure $18 Billion in financing.

Originally Posted by Detroit News

Ford Motor Co. is going all in on a bet-the-company financing strategy that will put virtually all of its U.S. assets -- including factories, office buildings and technology -- up as collateral in a multibillion-dollar credit deal designed to buy time to execute a North American restructuring.

The struggling automaker hopes to obtain $18 billion in financing to fund its turnaround and shore up its liquidity as protection against unanticipated events, such as a recession, the company said in a statement Monday.

The financing will include up to $15 billion in secured loans, which will be backed by most of Ford's domestic assets, as well as all or part of the stock it owns in subsidiaries such as Ford Motor Credit Co. and Volvo.

This is the first time Ford has put its assets up as collateral. Doing so gives it access to much-needed funding, but also translates into a big increase in debt-servicing costs. More critically, the company's future is on the line if it fails to execute a turnaround.

"This is Ford's one last shot to get it right," said Wall Street analyst John Casesa of the Casesa Shapiro Group LLC. "If the restructuring plan is not executed flawlessly, the company will lose its independence. Management is staking the entire future of the company on successfully executing this plan."

That plan, dubbed the Way Forward, calls for shuttering more than a dozen factories and cutting some 30,000 factory jobs and 14,000 salaried positions to resize the automaker to match reduced demand for its cars and trucks.

Faced with increasingly stiff foreign competition, Ford has been hemorrhaging U.S. market share for years. Meanwhile, the company's financial woes have mounted as it grapples with rising costs for everything from health insurance to raw materials.

Casesa said Ford has not faced a challenge of this magnitude since the end of World War II, when it emerged a distant -- and struggling -- second to General Motors Corp. The problems of the 1970s and 1980s pale in comparison.

Ford is not the first Detroit automaker to pledge assets to borrow money. GM, which is restructuring after a $10.6 billion loss last year, in July used North American assets, including inventory, plants and property, to secure a $4.6 billion revolving loan. GM also pledged assets last month to secure a $1.5 billion loan.

But the scope of Ford's plan surprised analysts. The $18 billion amounts to about $11.7 billion in new funding because the new secured credit line replaces a $6.3 billion unsecured credit line

Ford will also be seeking about $3 billion in new unsecured notes, which may include bonds convertible into common stock. The size of each piece of the deal will ultimately depend on market conditions.

The unsecured financing is being arranged by Citigroup Corporate and Investment Banking, Goldman Sachs Credit Partners LP and J.P. Morgan Securities Inc.

Ford expects the deals to close by Dec. 31 and hopes to end the year with $38 billion in liquidity.

"This is mammoth," said analyst Bradley Rubin of BNP Paribas in New York. "It was a lot bigger than Wall Street was expecting."

Ford's stock fell 4.23 percent Monday to close at $8.16 a share.

Two debt-rating agencies -- Standard & Poor's and Moody's -- cut their ratings on Ford's senior unsecured bonds deeper into junk status on Monday's news.

Standard & Poor's credit analyst Robert Schulz said the action was taken because it could be hard for unsecured creditors to recoup their investment if Ford defaults on its debt.

Bankruptcy is what Ford hopes to avoid. The consequences of a Chapter 11 filing would be particularly dramatic at Ford because the Ford family would lose the super-voting shares that give them control of the company.

"We see this new financing as an acknowledgement that its problems are more serious and may take longer to fix than it initially anticipated," said Shelly Lombard, an analyst at Gimme Credit. "We expected Ford to run through at least $5 billion of cash next year. At that kind of run rate, the company would have had only a few more years of liquidity, especially since it insists that it won't sell Ford Motor Credit."

Ford may also have timed the move to the health of the debt market, Goldman Sachs analyst Robert Barry said in a note.

"We think Ford is taking advantage of a favorable debt market to grab as much financing as it can, lowering the risk of insolvency as it works to restructure," Barry said.

The automaker also had few alternatives, and seeking financing may be less complicated than selling off assets such as Ford Motor Credit, he said.

Ford could still sell Jaguar or Land Rover, as neither of those brands appears to be pledged in this deal. The company is already looking for a buyer for its Aston Martin brand.

"Short of finding a well-capitalized partner," Casesa said, "this is all the company can do."

Now that's a bold move...

Will this new multi billion dollar financing plan work for Ford?? Or is it the beginning of the end for the automaker?

Personally, I think it will help them out, but it's a shame that alot of it will go down the drain due to losses.

I think the biggest question is, Will Ford file for chapter 11 within the next decade?

[whiteballz]

probably will file for chapter 11, atleast partially.

FMC aust will most likely survive, perhaps as so common in the pacific these days stage a coup and break free from FMC american control..

[adrenaline]

I can't determine whether this is global assets, or just North American. Either way, the risk is huge. IF they have put all assets up as collateral, then I'm not sure about how safe FoMoCo of Australia will be in the case of a failure/ sell off.

With Mark Fields and Alan, I don't imagine they won't be failing too quickly. Ford recently showed off 18 new/ upgraded models (to employees only) that will be on the market by this time next year.

[baddabang]

Wow Ford grew a set with that move.

Anybody know what they are asking for Aston Martin? Christmas is coming

[adrenaline]

It's going to the highest bidder. I think it was hovering around 5 billion (I think). They are taking it slow, especially after they sold Hertz too cheap, the buyer actually profited from the sale, IIRC.

[syko]

This is the last thing I expected and as baddabang said it takes balls to make a move like this. I was hearing on from various news sources that ford wasn't expecting to be profitable for at least 3 years and that there cash reservers would last about that long. So maybe it isn't that surprising that they took this move instead of just selling off their various brand names. Hope that it works and they return to be profitable in the near future.

[Mr.Tiv]

Balls, cajones, balles, bälle whatever you call them, Ford has them.

[Juggs]

if ford wants to make some money in the US how bout they give us some of the sweet ass models you lucky aussies get! all fords products except the mustang and the trucks look like crap and are boring and have no cool features! can any of you australians get a hold of an 02 cobra bumper for me?

[IBrake4Rainbows]

That is one gutsy move. It makes it that much sadder to say that Ford's done for.

Desperate moves for desperate times.

[nota]

Originally Posted by Juggs

can any of you australians get a hold of an 02 cobra bumper for me?

Juggs do you mean from an AU-spec Cobra with those bumper-mounted lights?

For your interest
http://autospeed.drive.com.au/cms/A_1211/article.html

[Juggs]

Originally Posted by nota

Juggs do you mean from an AU-spec Cobra with those bumper-mounted lights?

For your interest
http://autospeed.drive.com.au/cms/A_1211/article.html

yes thats the one i am talking about we didnt even get an 02 cobra here in the US! i havent seen it from that angle before..i dont like it that much now lol. thats ok tho i really just want the bumper inserts for the lights which i guess you can still buy but i just dont know where to get em over here

[Mr.Tiv]

Originally Posted by IBrake4Rainbows

That is one gutsy move. It makes it that much sadder to say that Ford's done for.

Desperate moves for desperate times.

It's not over till it's over, and, you have to admit, sad as this situation is, it's still better than them just rolling over and dying. Ford has history, and, in many cases, great prestige. This isn't the end of Ford, but could well be the end of Ford as we know it, as an independent entity

["Clevor" Angel]

The auto industry in many ways is the US economy, help them help the rest of the states. Why doesn't Bush see that? Bush and Bush Sr. aren't much for economics. A VERY BOLD move indeed, it would be terrible if the Ford family lost control, its been a family owned buisness for over 100 years.

[Cyco]

If the Ford family looses control its probably the best thing that can happen to the company. The current generation is demonstrating they don't know how to run a company of this size and their removal from management will allow the hiring of someone who can.

[taz_rocks_miami]

An 18 billion dollar loan, I wish I had brokered that transaction!!!!!!!