8-KMaterial AgreementsFinancial EventsOther Events+1

FORD MOTOR CO 8-K Report, Material Agreement (Sep 22, 2009)

Filed September 22, 2009For Securities:FF-PCF-PDF-PB

Summary

This 8-K filing from Ford Motor Company (F) on September 22, 2009, details the finalization of a material definitive agreement with the U.S. Department of Energy (DOE) for a significant term loan facility. The agreement, dated September 16, 2009, pertains to the Advanced Technology Vehicles Manufacturing Incentive Program (ATVM Program) and provides Ford with access to up to $5.937 billion in loans. These funds are designated to finance the costs associated with developing and manufacturing advanced technology vehicles and components in the United States, extending through mid-2012. The loan facility is structured as a 13-year multi-draw term loan, with initial draws expected by September 30, 2009. The interest rate is a blended rate based on Treasury yields, with an estimated initial rate of 3.22%. The loan matures in June 2022 and will be repaid in quarterly installments starting in September 2012. This significant financial arrangement underscores Ford's commitment to advanced vehicle technologies and its reliance on government support during a critical period.

Key Highlights

  • 1Ford Motor Company finalized a loan arrangement with the U.S. Department of Energy (DOE) under the Advanced Technology Vehicles Manufacturing (ATVM) Incentive Program.
  • 2The agreement provides access to a 13-year, multi-draw term loan facility of up to $5.937 billion.
  • 3Loan proceeds will finance the costs of thirteen approved advanced technology vehicle programs through mid-2012.
  • 4The facility allows for draws from September 16, 2009, through June 30, 2012, with maturity on June 15, 2022.
  • 5Interest rates are blended based on Treasury yields, with an estimated initial rate of 3.22% per annum.
  • 6The loans are secured by a first priority security interest in assets purchased with loan proceeds and a junior security interest in existing collateral.
  • 7Certain Ford subsidiaries will guarantee the loan obligations.

Frequently Asked Questions

The loan facility is part of the U.S. Department of Energy's Advanced Technology Vehicles Manufacturing (ATVM) Incentive Program. Its purpose is to finance eligible project costs for thirteen approved advanced technology vehicle programs that Ford is undertaking to develop and manufacture in the United States through mid-2012.

The loan facility matures on June 15, 2022, and principal repayments will commence in September 2012. Advances can be drawn through June 30, 2012. The interest rate is a blended rate based on the Treasury yield curve at the time of borrowing, with an estimated initial rate of 3.22% per annum. Interest is payable quarterly.

Ford's obligations are secured by a first-priority security interest in assets purchased or developed with the loan proceeds. Additionally, it carries a junior security interest in collateral already pledged under Ford's existing credit agreement. Certain Ford subsidiaries, which hold substantial domestic automotive assets, will also guarantee the company's obligations under this facility.

Yes, the loan agreement includes affirmative and negative covenants similar to Ford's existing credit agreement. These include requirements for financial statement delivery, maintenance of the automotive business, and restrictions on dividend payments, equity repurchases, incurring additional secured indebtedness, mergers, and significant asset sales, among others. A key negative covenant requires the company to maintain Available Liquidity of at least $4 billion.