Ford Motor Co. wants to improve its balance sheet and to eventually reach an investment-grade credit rating and so it has recently revealed an expanded and extended revolving credit facility. From an $8.9 billion revolving credit, Ford now has access to $9.3 billion. Of this figure, $9 billion now matures on Nov. 30, 2015, two years later.
As planned, the other $300 million will mature in 2013. Ford Treasurer Neil Schloss said that this credit stands for a valuable source of committed liquidity and financial flexibility for the automaker. Schloss said that this offer was "significantly oversubscribed" by banks. He added that this is an insurance policy that the company hopes to never have to use.
This revolver is included in the over $23 billion that Ford borrowed in late 2006 to support its turnaround, secured by assets such as the Blue Oval logo. The initial line of credit was at $11.5 billion. Since then, Ford has repaid almost all of the $23 billion. The collateral promised to lenders under the revolver would be released when Ford achieved investment grade ratings from at least two of the three major ratings agencies.
Ford is rated by Moody's Investors Service, Standard and Poor's Ratings Service and Fitch Ratings at one notch below investment grade. Banks that participate in this deal understand that this revolving credit would shift to an unsecured facility "in the near future" as soon as Ford reached investment grade. A "One Ford" plan is being enforced to simplify and unify product development and supplies. Last year, Ford's U.S. market share was 16.8%, falling behind General Motors Co. with 19.1%.