Ford Ups Convertible Debt Sale To $2.5B

DEARBORN, Mich. (AP) -- Ford Motor Co. has expanded its capital raising plans, now selling $2.5 billion worth of senior convertible debt, up from a previous planned offer of as much as $2.3 billion.

"This was a successful transaction and the results exceeded our expectations," said Lewis Booth, Ford chief financial officer, in a statement late Tuesday.

Ford on Monday said it would sell about $1 billion in stock and up to $2.3 billion in convertible debt to raise more cash, and asked lenders for extra time to repay at least some of the $10.1 billion borrowed under a line of credit. Ford President and CEO Alan Mulally said that over time the moves would "reduce the company's debt burden, providing an additional cushion given the still uncertain state of the economy."

Ford said Tuesday that the notes, due Nov. 15, 2016, will bear interest at a fixed rate of 4.25 percent per year. Ford has granted the underwriters an option to purchase an additional $375 million worth of notes to meet excess demand.

The sale of the notes to underwriters is expected to settle on Nov. 9. The notes will be convertible into shares of Ford common stock, cash or a combination thereof, at Ford's choice. The initial conversion rate is 107.5269 shares of Ford common stock per $1,000 worth of notes, which equals an initial conversion price of about $9.30 per share.

Barclays Capital, BofA Merrill Lynch, Citi, Deutsche Bank Securities, Goldman Sachs & Co., J.P. Morgan, Morgan Stanley and RBS are acting as joint book-running managers of the notes offering. BNP Paribas and HSBC also will be included in the underwriting syndicate for the offering.