Jim Farley in 2017.
Luke Macgregor | Bloomberg | Getty images
DETROIT – Ford Motor plans to raise approximately $ 2 billion through a five-year convertible bond offering, the company announced Tuesday.
The automaker intends to use the net proceeds from the sale for general corporate purposes, including the potential debt repayment. Ford had a debt of $ 24 billion to end last year, excluding its financial arm.
The bonds will be sold through a private offer to qualified institutional buyers, due 2026. Ford says the initial aggregate principal will be repaid in cash, while any excess will also be paid in cash, stock of the stock or a combination. of both, the company said.
Convertible bonds are debt that can be converted into a specified number of shares while offering the benefits of a bond, such as interest payments, but traditionally at low rates.
Ford expects to provide initial buyers of the bonds a 13-day option to purchase up to $ 300 million in principal of the bonds solely to cover any over-allotments.
Ford’s stock is up 50% so far this year to $ 13.20 thanks to plans to accelerate its car’s electrification efforts led by CEO Jim Farley, who took over in October. The company’s market capitalization is currently $ 51.6 billion.