Ford Moves To Repay $3 Billion of a Loan Ahead of Schedule

General Motors isn’t the only automaker paying off outstanding debt ahead of schedule. The Ford Motor Company is expected to pay a sizable chunk of its outstanding loans on April 6.

According to a filing with the U.S. Securities and Exchange Commission, Ford will repay creditors roughly $3 billion in April. That payment will cover just under half of a $6.7 billion credit note. Although not technically due until 2013, the move is part of Ford’s ongoing effort to reduce debts and strengthen its balance sheet.

By paying off the $3 billion, Ford will reduce its overall debt to just under $32 billion, and significantly reduce the company’s interest payments. Ford executives acknowledge that the $32 billion of debt the company is left with is still too much, and the automaker is working to further reduce its operating costs.

Eliminating that $32 billion hurdle will allow Ford to become more fiscally competitive with both Chrysler and GM. Although Ford has found more success in the market than either firm, the other “Detroit Two” were able to virtually shed their debt during the bankruptcy process. This may seem to be an economic disadvantage, but it has considerably improved the automaker’s public perception.

Source: The Detroit News


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