Jim Farley in 2017.
Luke Macgregor | Bloomberg | Getty Images
DETROIT – Ford Motor plans to raise about $ 2 billion through a five-year convertible note offering, the company announced on Tuesday.
The car manufacturer intends to use the net proceeds of the sale for general corporate purposes, including potential debt repayment. Ford had a $ 24 billion debt to close last year, except for its financial arm.
The banknotes will be sold through a private offer to qualified institutional buyers, due in 2026. Ford says the initial total amount of capital will be repaid in cash, while any excess amount will also be paid in cash, shares of shares or a combination of both, according to the company.
Convertible bonds are debts that can be converted into a specified number of shares, while offering the benefits of a bond, such as interest payments, but traditionally at low rates.
Ford expects to give original banknote buyers a 13-day option to buy up to an additional $ 300 million worth of banknotes, only to cover over-allocations, if any.
Shares of Ford have risen 50 percent so far this year to $ 13.20 on plans to accelerate vehicle electrification efforts under CEO Jim Farley, who took over in October. The company’s market capitalization currently stands at $ 51.6 billion.