Ford Motor Aims to Raise New Long-Term Debt -- 3rd Update
December 05 2016 - 8:29PM
Dow Jones News
By Christina Rogers
Ford Motor Co. will raise $2.8 billion in new long-term
financing for its automotive business, tapping debt markets for the
first time in nearly four years to fund investment in new
technologies.
The No. 2 U.S. auto maker disclosed the debt issuance in a
regulatory filing Monday and said it would take advantage of
favorable market conditions to raise money for "general corporate
purposes."
The move comes after several years of banking big profits on
increasing sales of trucks and sport utilities. The company has
signaled it expects increased pressure as the U.S. light-vehicle
market plateaus, regulatory costs increase and the race to make
cars more autonomous heats up.
Once awash in debt, Ford paid down its obligations in the years
following the financial crisis to revitalize its balance sheet.
General Motors Co. and Chrysler, now part of Fiat Chrysler
Automobiles NV, filed for bankruptcy in 2009 to erase billions of
dollars in debt.
All three companies have taken on new debt in recent years even
as profits soar. GM earlier this year issued $2 billion in new debt
to shore up its pension plan for U.S. hourly workers.
The last time Ford issued new automotive debt was in January
2013, when it raised $2 billion in 30-year notes at 4.75%. Ford had
$24.3 billion in automotive cash and $13.1 billion in debt at the
end of the third quarter 2016.
"Consistent with our recent investor day presentations, we
continue to increase our investments in emerging opportunities,
primarily in the areas of electrification, autonomy and mobility,"
the company said in a statement.
Ford is moving to diversify its operations beyond its core
business of building and selling cars, moving into new areas, such
as ride-hailing and car-sharing, in a bid to catch up with
deeper-pocketed Silicon Valley rivals trying to change the way
consumers think about getting around.
In recent months, the car company has announced a series of new
ventures aimed at broadening its mission, including purchasing a
van-shuttle service in San Francisco and taking a stake in
laser-sensor maker Velodyne Inc. which supplies components for
autonomous cars.
Ford's Chief Executive Mark Fields said in an interview Friday
the company plans to continue this strategy of betting small sums
on startups and tech firms that can help it bolster expertise in
emerging areas.
"We're always looking for appropriate partners but it comes down
to what capabilities do we need," Mr. Fields said.
The company has also committed to spending $4.5 billion in the
next three years to expand its lineup in electrified-vehicles and
plans to release a fully autonomous car with no brake pedals or a
steering wheel in 2021.
The Dearborn, Mich., auto maker's capital spending is expected
to rise to 5.6% of revenue in the next two years from 4.9% in 2016,
as Ford steps up investment and acquisitions related to new
businesses.
Write to Christina Rogers at christina.rogers@wsj.com
(END) Dow Jones Newswires
December 05, 2016 20:14 ET (01:14 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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