Ford Credit Agrees to Restructure Ford's Debt

DEARBORN, Mich. — Ford Motor Credit Company announced last Wednesday that its board of directors and the board of directors of Ford Motor Company have approved a plan to restructure Ford’s debt through a combination of a conversion offer by Ford and tender offers by Ford Credit.

As part of this debt restructuring plan, Ford Credit has commenced a $1.3 billion cash tender offer to purchase Ford’s unsecured, nonconvertible debt securities, or notes, of which approximately $8.9 billion aggregate principal amount is outstanding as set forth in detail in the table below.

Ford Credit also has commenced a separate $500 million cash tender offer to purchase Ford’s senior secured term loan debt, of which $6.9 billion aggregate principal amount is outstanding, under Ford’s secured credit agreement on Dec. 15, 2006. No debt securities of Ford Credit are included in these tender offers.

“The tender offers we are announcing today will play a key role in supporting Ford's plan to create a healthy, profitable enterprise,” said Ford Credit Chairman and CEO Mike Bannister. “It is in Ford Credit’s best interest to advance Ford’s long-term financial stability as it will strengthen our ability to profitably support the sale of Ford products.”

Any notes acquired by Ford Credit will be retired in settlement of existing intercompany tax liabilities to Ford or in distributions to Ford. Any term loan debt acquired by Ford Credit is expected to be distributed to its parent, Ford Holdings LLC, and forgiven. These payments and distributions by Ford Credit are consistent with its previously announced plans to return capital to Ford.

Another part of this debt restructuring plan involves Ford’s conversion offer of its 4.25 percent senior convertible notes due Dec. 15, 2036, in which it will pay a premium in cash to induce the holders to convert debt for shares of Ford’s common stock.

Ford will also defer future dividend payments on the 6.50 percent Cumulative Trust Preferred Securities of Ford Motor Company Capital Trust II beginning in April.