Motor Co. on Thursday said it would buy back up to $5 billion in high-priced debt, a move that comes as finance chief John Lawler works to overhaul the car maker’s balance sheet and improve its credit rating.
Buying back the debt with cash from its operations would help the auto manufacturer bring down its interest costs and reduce its debt levels. Ford said it expects to incur a charge in the range of $1 billion to $1.2 billion depending on which securities are bought back.“We can have the flexibility now to rework our debt structure,” Mr. Lawler said, adding that Ford expects the tender offer to have a significant impact on its cost of debt.
“You could potentially see a green bond issuance, which we believe will be healthy for the company and…improve our balance sheet, lower our debt, and lower the cost of our debt considerably,” Mr. Lawler said. Thursday’s tender offer “is a very strong signal, in addition to the reinstated dividend, that the balance sheet is being repaired fast,” said Philippe Houchois, a managing director at investment bank Jefferies Group.
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