Summary
Ford Motor Company has announced a significant financial development through its joint venture, BlueOval SK, LLC (BOSK). On December 13, 2024, BOSK secured a substantial loan arrangement with the Department of Energy (DOE) for up to $9.63 billion. This funding is earmarked for the construction of battery manufacturing plants in Tennessee and Kentucky, crucial for Ford's electrification strategy. As a 50% owner of BOSK, Ford has entered into a Sponsor Support, Share Retention and Subordination Agreement (SSA) with the DOE, which includes a guarantee of 50% of BOSK's payment obligations under the loan. The SSA imposes covenants on Ford that are largely consistent with its existing credit agreements, focusing on financial reporting, business maintenance, and limitations on mergers, liens, and sale-leaseback transactions. Notably, Ford must maintain available liquidity of at least $4 billion. The agreement also outlines specific events of default related to Ford's financial health and corporate actions, which, if triggered, could also constitute defaults under the primary loan agreement.
Key Highlights
- 1BlueOval SK (BOSK), a Ford 50% joint venture, secured up to $9.63 billion in financing from the Department of Energy (DOE) for battery plant construction.
- 2The DOE loan is intended to fund manufacturing facilities in Tennessee and Kentucky.
- 3Ford has guaranteed 50% of BOSK's payment obligations under the DOE loan through a Sponsor Support Agreement (SSA).
- 4The SSA includes covenants for Ford similar to its existing credit agreements, covering financial reporting, business continuity, and restrictions on certain corporate actions.
- 5Ford is required to maintain a minimum of $4 billion in available liquidity under the SSA.
- 6The SSA specifies events of default tied to Ford's financial condition and operational status, which can trigger defaults under the DOE loan.
- 7The BOSK DOE Loan has a final maturity date expected in July 2040.