What is the purpose of the Ford Motor Company Capital Trust II and the issuance of Preferred Securities?

The Ford Motor Company Capital Trust II was established to facilitate the issuance of 6.50% Cumulative Convertible Trust Preferred Securities. This is a financing mechanism to raise capital for Ford, effectively enhancing its capital structure by issuing these securities backed by Ford's own subordinated debentures.

What is the nature of the lawsuit filed against Ford?

A class action lawsuit was filed alleging securities fraud. The core of the complaint is that Ford made misrepresentations to investors regarding its purchases of precious metals (palladium, platinum, rhodium) used in catalytic converters, particularly in relation to a $1 billion charge taken in late 2001 for write-downs of these metals.

How does the $1 billion charge relate to the class action lawsuit?

The $1 billion pre-tax charge recognized in the fourth quarter of 2001, due to declining precious metal prices and technological advancements, is central to the lawsuit. Plaintiffs allege that Ford's prior statements about its precious metal dealings were misleading, and this charge may represent a materialization of risks that were not adequately disclosed.

What are the key financial instruments involved in the trust offering?

The key financial instruments are the 6.50% Cumulative Convertible Trust Preferred Securities offered by the Trust and the 6.50% Junior Subordinated Convertible Debentures issued by Ford to the Trust. Ford also provides a guarantee for the Preferred Securities, as described in the filing.

FORD MOTOR CO 8-K SEC Disclosure

Summary

Ford Motor Company (F) filed an 8-K on January 30, 2002, detailing significant financing activities and a class action lawsuit. The company, through a newly formed trust (Ford Motor Company Capital Trust II), is offering 100,000,000 shares of 6.50% Cumulative Convertible Trust Preferred Securities, with an aggregate liquidation preference of $50 per security. These securities are backed by $5.15 billion in 6.50% Junior Subordinated Convertible Debentures issued by Ford. This transaction is designed to enhance Ford's capital structure and is expected to close on January 30, 2002. In addition to this financing, the filing also disclosed a securities fraud class action lawsuit filed against Ford on January 29, 2002. The lawsuit, filed on behalf of shareholders from December 1, 1998, to January 2, 2002, alleges misrepresentations concerning Ford's purchases of precious metals used in catalytic converters. This disclosure follows Ford's recognition of a $1 billion pre-tax charge in the fourth quarter of 2001 to account for write-downs of excess precious metals and forward contracts, attributed to declining market prices and new technologies reducing metal usage.

Key Highlights

1Ford Motor Company is issuing 6.50% Cumulative Convertible Trust Preferred Securities through Ford Motor Company Capital Trust II.
2The offering involves 100,000,000 preferred securities with a liquidation preference of $50 each.
3Ford is issuing $5.15 billion in 6.50% Junior Subordinated Convertible Debentures to the trust to back the preferred securities.
4A class action lawsuit was filed against Ford on January 29, 2002, related to alleged misrepresentations about precious metal purchases.
5The lawsuit covers the period from December 1, 1998, through January 2, 2002.
6Ford recognized a $1 billion pre-tax charge in Q4 2001 for precious metals write-downs, impacting the lawsuit's context.
7The transactions and disclosures are expected to be completed on or around January 30, 2002.

FORD MOTOR CO 8-K Report (Jan 30, 2002)

Summary

Key Highlights

Frequently Asked Questions