Ford Commences Conversion Offer For 6.50% Cumulative Convertible Trust Preferred Securities
Ford Motor Company [NYSE: F] (“Ford”) today commenced a conversion offer related to the outstanding 6.50% Cumulative Convertible Trust Preferred Securities [NYSE: F PrS] of Ford’s wholly owned subsidiary trust, Ford Motor Company Capital Trust II.
The trust preferred securities, which were issued in 2002, have an aggregate liquidation value of about $5 billion. Each trust preferred security has a liquidation value of $50 and is convertible into 2.8249 shares of Ford common stock at the holder’s option. The subsidiary trust’s sole assets are $5.2 billion principal amount of 6.5% Junior Subordinated Convertible Debentures due 2032 of Ford Motor Company, which will be cancelled to the extent trust preferred securities are converted into Ford common stock. Through the debentures and other instruments, Ford has effectively guaranteed the trust preferred securities.
The conversion offer is scheduled to expire at 5:00 p.m., Eastern Time, on Tuesday, July 31, 2007, unless extended or earlier terminated, and is expected to settle on Friday, August 3, 2007.
Holders who elect to convert their trust preferred securities into shares of Ford’s common stock will receive 2.8249 shares of Ford common stock plus a premium consisting of shares of Ford common stock valued at $14.25 for each trust preferred security. The number of premium shares received will be determined by the average market price of Ford common stock on July 25, 26 and 27, 2007 (assuming the offer is not extended).
“As we continue to make progress on restructuring our automotive operations to return to profitability, we also are focused on improving our balance sheet, which this conversion offer will do,” said Don Leclair, Ford’s executive vice president and chief financial officer.
The conversion offer is being made pursuant to an offering circular and related documents, each dated July 2, 2007. The completion of the offer is subject to conditions described in the conversion offer documents. Subject to applicable law, Ford may waive the conditions applicable to the offer or extend, terminate or otherwise amend the offer.
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