This means that the car maker will cut its Automotive debt by $2.98 billion (at a redemption price of $50.33 per trust preferred security, plus accrued and unpaid distributions of $0.5416667 per trust preferred security), a major progress for creating a stronger balance sheet. In addition, annualized interest costs should be lowered by about $190 million and create the premises for a 2011 first quarter charge of up to about $60 million.
“We remain focused on reducing our Automotive debt as the core automotive business continues to strengthen,” said Lewis Booth, Ford executive vice president and chief financial officer.
“We are pleased with the progress we have made, and we are committed to continuing to improve our balance sheet to lay a solid foundation for a strong and profitably growing business in years to come.”
By announcing this move, Ford hopes to get closer to its target of bringing down the automotive debt. Last year, the auto maker slashed $14.5 billion, and more is to come as a result of actions to follow.
In 2010, Ford managed to achieve four major milestones: it repaid in full the $7 billion VEBA debt obligations, it gave back $6.7 billion of the 2013 revolving credit facility, reduced its debt by $1.9 billion and made Term Loan B payments of $1.2 billion.
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