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Jim Farley in 2017.
Luke Macgregor | Bloomberg | Getty Images
DETROIT – Ford Motor plans to raise around $ 2 billion through a five-year convertible note offering, the company said on Tuesday.
The automaker intends to use the net proceeds from the sale for general corporate purposes, including eventual debt repayment. Ford was in debt of $ 24 billion at the end of last year excluding its financial arm.
The notes will be sold in a private offer to qualified institutional buyers, due in 2026. Ford says the initial aggregate principal amount will be repaid in cash, while any excess amount will also be paid in cash, in shares of action or a combination of the two, depending on the company.
Convertible bonds are debt securities that can be converted into a specified number of shares, while still providing the benefits of a bond, such as interest payments, but traditionally at low rates.
Ford plans to give the initial buyers of the notes a 13-day option to purchase up to an additional $ 300 million in aggregate principal of the notes, only to cover over-allotments, if any.
Ford shares are up 50% so far this year to $ 13.20 on plans to accelerate its vehicle electrification efforts under CEO Jim Farley, who took over in October. The company’s market capitalization currently stands at $ 51.6 billion.
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