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Ford announces $2 billion convertible notes offering

Jim Farley in 2017.

Luke Macgregor | Bloomberg | Getty Pictures

DETROIT – Ford Motor plans to raise about $2 billion through an offering of five-year convertible notes, the plc announced Tuesday.

The automaker intends to use the net proceeds from the sale for general corporate purposes, including the potential repayment of responsibility. Ford had $24 billion in debt at the end of last year excluding its financial arm.

The notes will be sold through a exclusive offering to qualified institutional buyers, due in 2026. Ford says the initial aggregate principal amount will be requited back in cash, while any excess amount will also be paid in cash, shares of the stock or a combination of both.

Convertible controls are debt that can be converted into a specified number of shares, while offering the benefits of a bond, such as captivate payments but traditionally at low rates.

Ford expects to grant the initial purchasers of the notes a 13-day option to buy up to an additional $300 million aggregate paramount amount of the notes, solely to cover overallotments, if any.

Shares of Ford are up 50% so far this year to $13.20 on plans to accelerate its channel electrification efforts under CEO Jim Farley, who took over the helm in October. The company’s market cap currently stands at $51.6 billion.

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