Ford Mortgages Assets to Pay for Overhaul
November 28th, 2006This is weird. I know Ford insiders read Cryptogon. Here’s my PGP key. What unanticipated events?
Via: New York Times:
For the first time in its 103-year history, the Ford Motor Company is mortgaging its assets, including factories, equipment, office buildings, patents and trademarks, and stakes in subsidiaries like Volvo, in order to raise $18 billion to overhaul itself.
The amount Ford is borrowing exceeds the total market value of all its outstanding stock by more than $2 billion.
Although other auto companies have put up manufacturing equipment and other types of collateral over the years to secure loan, Ford has never done so before. For many decades, its credit was so good that it could easily borrow without pledging assets.
By doing so now, analysts said, Ford is putting its independence at risk. If management fails in its latest attempt to make the ailing company profitable again, Ford may be left with little choice but to find a buyer or merger partner or file for bankruptcy protection.
“This refinancing tells us that they see very tough times ahead,†said John Casesa, a veteran automotive analyst with Casesa Strategic Advisers in New York. “Either they’re incredibly conservative, or they’re preparing for an extremely dark outlook.â€
Ford, in a statement, said it needs the financing “to address near- and medium-term negative operating-related cash flow, to fund its restructuring, and to provide added liquidity to protect against a recession or other unanticipated events.â€
The executives want to pump up the company with money so they can give themselves big bonuses and add funds to cash flow so they can pump up stock price and sell their options before the pig crashes
http://www.census.gov/indicator/www/m3/adv/pdf/durgd.pdf
Census bureau reported that Durable Goods orders fell 8.3% in October. This was the greatest fall since June 2000, 6 months before the last recession. And like 2000, durable goods orders are now negative Year-over-Year.
Ahh, the old count-borrowed-money-as-income trick! HA! You have to wonder, though, how many tentacles that pig has (very many, is my guess), and what else it will bring down when it dies.
This is the last gasp of a dying sloth. They will eventually have no choice but to merge with GM.
On that note I’m off to the L.A. Autoshow to see what gas-guzzling monstrosities they intend to market in the coming year–and laugh at their folly.