Jim Farley in 2017.
Luke Macgregor | Bloomberg | Getty Images
DETROIT – Ford Motor plans to raise about $ 2 billion through a five-year convertible banknote offering, the company announced on Tuesday.
The automaker intends to use the net proceeds from the sale for general corporate purposes, including potential debt repayment. Ford had $ 24 billion in debt at the end of last year, excluding its financial arm.
The notes will be sold through a private offering to qualified institutional buyers due in 2026. Ford says the initial principal value will be paid in cash, while any excess value will also be paid in cash, shares or a combination of both , according to the company.
Convertible bonds are debts that can be converted into a number of shares, while offering the benefits of a bond, such as interest payments, but traditionally at low rates.
Ford expects to give initial note buyers a 13-day option to purchase up to an additional aggregate principal amount of $ 300 million of the notes, exclusively to cover excess lots, if any.
Ford shares have soared 50% so far this year, to $ 13.20, in plans to accelerate their vehicle electrification efforts under CEO Jim Farley, who took over in October. The company’s market capitalization is currently $ 51.6 billion.