What is the primary purpose of this $5.937 billion loan commitment from the DOE?

The primary purpose of this loan commitment is to provide funding for Ford Motor Company's expenditures related to developing and manufacturing advanced technology vehicles and their components through 2011. These funds will support thirteen specific, DOE-approved projects.

What conditions must be met before Ford can receive these funds?

Several conditions must be satisfied, including the finalization of definitive loan agreements, DOE's satisfaction with Ford's legal, tax, and accounting matters, and confirmation of Ford's capital structure. Additionally, Ford needs to amend its existing credit agreements to allow for the subordination of collateral required for this new loan. Ford also must meet agreed-upon milestones and fuel economy targets for each project to draw funds.

How will this loan affect Ford's existing debt and collateral structure?

This loan will be secured by certain company assets, but its security interest will be subordinated to existing senior debt and certain other obligations. To facilitate this, Ford needs to amend its existing Credit Agreement and a specific secured note to increase the allowable limit for second lien debt, enabling the necessary collateral subordination for the ATVM loan.

When can Ford expect to begin drawing funds from this loan facility?

Ford anticipates that the loan documents will be entered into and all conditions satisfied by August 2009, after which the company can begin making draws against the facility. The borrowing period extends until June 30, 2012.

FORD MOTOR CO 8-K SEC Disclosure

Summary

Ford Motor Company has entered into a Conditional Commitment Letter with the U.S. Department of Energy (DOE) for a $5.937 billion term loan facility under the Advanced Technology Vehicles Manufacturing (ATVM) Incentive Program. This facility, to be provided by the Federal Financing Bank (FFB), is intended to fund eligible expenditures for advanced technology vehicle programs through 2011. The commitment is contingent upon the finalization of definitive loan agreements, satisfactory legal and financial conditions for Ford, and necessary amendments to Ford's existing credit agreements to allow for the required collateral subordination. This significant funding commitment from the DOE signifies potential support for Ford's transition to producing more fuel-efficient vehicles. Investors should note that while a commitment is in place, the loan disbursement is subject to several conditions and the finalization of complex legal documentation. The loan will mature in 2022 and will be secured by assets related to the funded projects and other company collateral, albeit subordinated to existing senior debt. The company anticipates finalization and the ability to begin drawing on these funds by August 2009.

Key Highlights

1Ford Motor Company has secured a conditional commitment for a $5.937 billion term loan from the U.S. Department of Energy under the ATVM Program.
2The loan proceeds are designated to fund expenditures for thirteen approved advanced technology vehicle programs through 2011.
3The commitment is subject to the negotiation and execution of definitive loan agreements and satisfaction of various conditions by both Ford and the DOE.
4The loan facility will be a 13-year multi-draw term loan with a maturity date of June 15, 2022.
5The loan will be secured by a first priority security interest in assets purchased or developed with loan proceeds and a subordinated security interest in other company collateral.
6Amendments to Ford's existing credit agreements will be required to permit the necessary subordination of collateral for the new loan.
7Ford anticipates the loan documents to be finalized and draws to commence by August 2009.

FORD MOTOR CO 8-K Report, Corporate Update (Jun 29, 2009)

Summary

Key Highlights

Frequently Asked Questions