In a press release issued yesterday, Ford revealed that it used $2.4 billion in cash plus 468 million company shares to reduce its long-term debt by $9.9 billion.
According to the press release, Ford had $25.8 billion in debt on December 31, 2008. The dramatic debt elimination also reduces Ford’s annual cash interest payments by more than $500 million.
“By substantially reducing our debt, Ford is taking another step toward creating an exciting, viable enterprise,” said Alan Mulally, Ford’s President and CEO. “As with our recent agreements with the UAW, Ford continues to lead the industry in taking the decisive actions necessary to weather the current downturn and deliver long-term profitable growth.”
Now that Ford has won the concessions from its bondholders that GM needs from its own bondholders, the General’s executives are probably green with envy. Or maybe, since they’ve been spending so much time with the Obama camp lately, it gives them a reason to hope for the best.
Either way, it’s clear that Mulally has uncanny foresight. From the $23 billion recapitalization he moved forward, as well as his internal push for the sale of Jaguar, Land Rover and Aston Martin while there were still buyers, his arrival couldn’t have been better timed. Let’s hope Ford has the chance to make a full recovery – and that Chrysler and GM can learn from Ford’s moves.