About three-fourths of Ford Motor Co. noteholders have accepted the company’s offer to exchange notes for shares of stock and cash, allowing the company to reduce its debt by more than $1.9 billion, the automaker said Wednesday.
The offer, made in October, brings Ford’s debt reduction so far this year to $12.8 billion, lowering annual interest costs by $1 billion, the company said in a statement. Ford has said it expects to have more cash than debt by the end of the year.
Ford made the offer of cash and stock to holders of $3.5 billion in convertible notes due in 2016 and 2036, and it was good until 12 a.m. Wednesday. Holders of just over $2.5 billion worth of notes accepted the offer. The actual debt reduction is smaller than the notes redeemed in the offer because of accounting rules governing notes that are convertible to stock, Ford said.
Ford will have to pay out $534 million in cash and 274 million shares of common stock as part of the offer. The company says the stock was issued at the start of the year and should not dilute the value of existing shares. It has about 3.47 billion common shares outstanding.
The Dearborn, Mich., automaker expects to take a one-time charge of $960 million in the fourth quarter because of the offer.
The notes were held mainly by hedge funds and other big investors.
Ford mortgaged assets including its blue oval logo four years ago to pay for a huge restructuring.
It now will have about $20.9 billion in debt on its books.
Shares of Ford were up 15 cents, or just under 1 percent, to $15.85 in afternoon trading.
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