Ford Authority

Ford Announces Pricing Of $2 Billion Convertible Notes Offering

Earlier this week, Ford announced that it was planning on offering a $2 billion aggregate principal amount of convertible notes, or short-term debts that convert into equity, due in 2026. The automaker intends to use the net proceeds from this offering for general corporate purposes, including the potential repayment of debt. Now, it has announced the pricing for those convertible notes.

Ford also granted the initial purchasers of the notes a 13-day option to purchase up to an additional $300 million aggregate principal amount of the notes, solely to cover over-allotments, if any. The sale of the notes to the initial purchasers is expected to close on March 19th, 2021, subject to customary closing conditions, and is expected to result in approximately $1.971 billion in net proceeds to Ford after deducting the initial purchaser’s discount and estimated offering expenses payable by Ford (assuming no exercise of the initial purchaser’s over-allotment option).

The notes will be unsecured, senior obligations of Ford. The notes will not bear regular interest, and the principal amount of the notes will not accrete. The notes will mature on March 15th, 2026, unless earlier repurchased, redeemed, or converted. Ford may not redeem the notes prior to March 20th, 2024.

Ford may redeem for cash all or any portion of the notes, at its option, on or after March 20th, 2024, if the last reported sale price of Ford’s common stock has been at least 130 percent of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on and including the trading day preceding the date on which Ford provides notice of redemption at a redemption price equal to 100 percent of the principal amount of the notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding the redemption date.

The initial conversion rate for the notes is 57.1886 shares of Ford’s common stock per $1,000 principal amount of notes (which is equivalent to an initial conversion price of approximately $17.49 per share). Prior to the close of business on the business day immediately preceding Dec. 15th, 2025, the notes will be convertible at the option of the noteholders only upon the satisfaction of specified conditions and during certain periods as set forth in the indenture for the notes.

Thereafter, until the close of business on the second scheduled trading day preceding the maturity date, the notes will be convertible at the option of the noteholders at any time regardless of these conditions. Conversions of the notes will be settled in cash up to the aggregate principal amount of the notes to be converted and cash, shares of Ford’s common stock or a combination thereof, at Ford’s election, in respect of the remainder, if any, of Ford’s conversion obligation in excess of the aggregate principal amount of the notes being converted. The last reported sale price of Ford’s common stock on March 16th, 2021, was $12.49 per share.

We’ll have more on all of Ford’s financial moves as they happen, so be sure and subscribe to Ford Authority for non-stop Ford news coverage.

Brett's lost track of all the Fords he's owned over the years and how much he's spent modifying them, but his current money pits include an S550 Mustang and 13th gen F-150.

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