When will Ford go bankrupt?

Article about GM and Ford
http://globaleconomicanalysis.blogspot.com/2009/05/1000-gm-dealerships-forced-out-may-15.html

"Ford is wise to raise cash. Will $1.4 billion be enough?

A quick look at Ford's Annual Report shows Ford has $22 billion in cash and cash equivalents, $154 billion in long term debt, and net tangible assets of negative $18.9 billion. $1.4 billion is a drop of liquidity in an ocean of problems. Expect this to be the first of many offerings.

Moreover, GM is likely to come out of bankruptcy with a cost advantage over Ford assuming GM sheds enough debt and forces enough union concessions.

A quick look at Ford's balance sheet is all that it takes to conclude Ford is unlikely to be strong enough to weather a significant cost disadvantage to GM and Chrysler. So unless GM quickly fails in restructuring thereby ridding the world of GM's capacity, Ford is likely to follow GM and Chrysler down bankruptcy road. Indeed, Ford's balance sheet is so bad, it is likely to fail anyway."

Tuesday 12 May 2009:

Ford raises $1.4 billion in $4.75-a-share offering

http://www.marketwatch.com/story/fo...a-share-offering-20095122025160?siteid=yhoof2

Ford Motor Co.
(F 5.01, -1.07, -17.60%) said late Tuesday it has priced its recently announced 300-million-share stock offering at $4.75 a share for total gross proceeds of approximately $1.4 billion. Ford's shares closed Tuesday trading at $5.01 a share. Following the announcement, the stock fell 0.4% in heavy-volume after-hours action to $4.99. Ford also said it granted to the underwriters a 30-day option to purchase up to 45 million additional shares of common stock to cover over-allotments
 
Just to clarify for historical snapshot / time capsule purposes:

As at 12 May 2009, according to Yahoo Finance, Ford has 2.40 billion shares outstanding.

2.40 billion * $5.01 =
Market cap of $12.024 billion.

The issue of 300 million new shares is 12.50% of the amount of shares outstanding.
 
http://www.freep.com/article/20090413/BUSINESS01/90413056/

By BRENT SNAVELY •
FREE PRESS BUSINESS WRITER •
April 13, 2009

Standard & Poor’s said today it upgraded its credit rating on Ford Motor Co’s debt, but warned that the automaker might not have enough cash left to run its business by the end of the year if sales don’t improve worldwide.


"We believe Ford may have to revisit its informal request for $9 billion of loans from the U.S. government, unless industry sales begin to recover later this year,” S&P credit analyst Robert Schulz said in the report.

Standard & Poor’s raised Ford’s credit rating to CCC+ — which is four notches below “junk status,” or investment grade — after temporarily putting the company under default status on April 6.

Standard & Poor’s revised its rating because Ford recently used $2.2 billion in cash and stock to repurchase $9.9 billion in debt, which will help it lower its annual interest payments by as much as $600 million.

S&P’s new rating is one notch higher than the rating it had on Ford’s debt in March, before Ford began its debt restructuring effort.

Ford’s debt rating was also raised last week by Moody’s Investors Service, which also said Ford’s debt restructuring lowers Fords risk of default.

Schulz said Ford’s debt restructuring improved the company’s balance sheet and noted that Ford is in better shape than either General Motors Corp. or Chrysler LLC, which have together received $17.4 billion in federal loans and are attempting to negotiate concessions on their debts from bondholders and banks.

Still, Schulz warned that Ford used $17.3 billion in cash in 2008 and said the automaker faces added challenges this year because industry sales have declined even further in the United States and in Europe.

Ford ended the year with $24 billion in cash and available credit. But Schulz estimates that if Ford uses more than $14 billion in cash this year, it may not have enough money left to run its business.

Standard & Poor’s assessment of the risks facing Ford stands in contrast to a report issued last week by Barclays Capital automotive analyst Brian Johnson, who estimated that at Ford would end 2009 with $14.5 billion in cash.

Ford’s stock closed at $4.26 today, up 2 cents from its Friday close of $4.24. Ford shares have more than doubled since Ford said announced it would restructure its debt.
 
Quote from pspr:

Who can compete with Government Motors and Union Motors who change the rules to suit themselves.
More...

The foreign auto makers because let's face it, the government and union will eventually fuck everything up.
 
Ford doing a convertible bond offering

http://finance.yahoo.com/news/Ford-Motor-Company-Announces-prnews-4261961327.html?x=0&.v=1

DEARBORN, Mich., Nov. 3 /PRNewswire-FirstCall/ -- Ford Motor Company (NYSE: F - News) today announced the pricing of its offering of senior convertible notes due Nov. 15, 2016. Notes in the aggregate principal amount of $2.5 billion will be offered, an increase from the $2 billion previously announced. The notes will be senior unsecured obligations of Ford and will bear interest at a fixed rate of 4.25 percent per year. Ford has granted the underwriters an option to purchase an additional $375 million in aggregate principal amount of notes.

The notes will be convertible, under certain circumstances, into shares of Ford common stock, cash or a combination thereof, at Ford's election. The initial conversion rate is 107.5269 shares of Ford common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $9.30 per share. The conversion rate and the conversion price are subject to adjustment upon the occurrence of certain events.

At time of writing (premarket) F is down 11 cents to 7.33 USD
 
Ford declared peace with their union workers decades ago. They gave them everything they were asking for in the way of a say in managing the company. At that time I knew that Ford had it made, workers are important to a company and if a company can engage them better in the effort then they have a big advantage. GM never did that to my knowledge, and the unions rode them right into bk...

Of course, in California, the public workers unions have wonderful deals and they are riding the state right into bk anyhow...
 
You will all laugh and flame me for this, but I think Chrysler will do the best of the three US car companies down the road. Reasoning: They were able to shed the most baggage and travel the lightest, And their new partner, Fiat, will be a better match with changing demographics.

Demographics of car ownership is changing-- slowly, but it is changing. There will be more use of public transportation in the future, say looking out ten years, and smaller really efficient cars will take a larger share of the market. Fiat has excellent engineering and styling and brings a ready made product to Chrysler that fits the new demographic. The old GM/Ford model of selling pretty cars with hype and planning on them falling apart in 5.5 years, forcing the bag holders to either buy new cars or pay $300 for the 20$ parts needed to keep their junk mobiles running, is weighing heavy on the American consumer. They don't mind paying a premium price up front so long as they get inexpensive to maintain and operate in return. The US manufacturer's marketing model failed to deliver this. Fiat and Japanese can deliver on all counts including inexpensive to purchase. Germans on the latter two.

US manufacturers just can't seem to figure it out and have apparently thought that they could sell anything forever with advertising. US consumers may be slow to learn, but eventually they do, and did.

In the past Fiat failed in the US not because they hadn't an attractive product, but because they could never get their act together with a reliable string of dealers and quickly available parts. If Chrysler can solve this old bugaboo, then it's a go, otherwise it's not.
 
You must log in or register to reply here.
Back
Top