Ford 2009 Annual Report Download - page 134

Notes to the Financial Statements
132 Ford Motor Company | 2009 Annual Report
NOTE 19. DEBT AND COMMITMENTS (Continued)
During the first quarter of 2009, pursuant to a request for conversion, we issued an aggregate of 2,437,562 shares of
Ford Common Stock, par value $0.01 per share, in exchange for $43 million principal amount of our Subordinated
Convertible Debentures.
Secured Term Loan and Revolving Loan
On December 15, 2006, we entered into a secured credit agreement (the "Credit Agreement") which provided for a
seven-year, $7 billion term-loan facility and a five-year revolving credit facility of $11.5 billion. Pursuant to our Credit
Agreement, at December 31, 2009, we had outstanding:
• $838 million of revolving loans which bear interest of LIBOR plus a margin of 2.25%, maturing on
December 15, 2011;
• $6.7 billion of revolving loans which bear interest of LIBOR plus a margin of 3.25%, maturing on
November 30, 2013; and
• $5.3 billion of a secured term loan maturing on December 15, 2013. The term loan principal amount amortizes
at a rate of $77 million (1% of original loan) per annum and bears interest at LIBOR plus a margin of 3.00%.
Under the Credit Agreement, we may designate certain of our domestic and foreign subsidiaries, including Ford Credit,
as borrowers under the revolving facility. We and certain of our domestic subsidiaries that constitute a substantial portion
of our domestic Automotive assets (excluding cash) are guarantors under the Credit Agreement, and future material
domestic subsidiaries will become guarantors when formed or acquired.
Collateral. The borrowings of the Company, the subsidiary borrowers, and the guarantors under the Credit Agreement
are secured by a substantial portion of our domestic Automotive assets (excluding cash). The collateral includes a
majority of our principal domestic manufacturing facilities, excluding facilities to be closed, subject to limitations set forth in
existing public indentures and other unsecured credit agreements; domestic accounts receivable; domestic inventory; up
to $4 billion of marketable securities or cash proceeds therefrom; 100% of the stock of our principal domestic subsidiaries,
including Ford Credit (but excluding the assets of Ford Credit); certain intercompany notes of Volvo Holding Company
Inc., a holding company for Volvo, Ford Motor Company of Canada, Limited and Grupo Ford S. de R.L. de C.V. (a
Mexican subsidiary); 66% to 100% of the stock of all major first tier foreign subsidiaries (including Volvo); and certain
domestic intellectual property, including trademarks.
Covenants. The Credit Agreement requires ongoing compliance with a borrowing base covenant and contains other
restrictive covenants, including a restriction on our ability to pay dividends. The Credit Agreement prohibits the payment
of dividends (other than dividends payable solely in stock) on Ford Common and Class B Stock, subject to certain limited
exceptions. In addition, the Credit Agreement contains a liquidity covenant requiring us to maintain a minimum of
$4 billion in the aggregate of domestic cash, cash equivalents, loaned and marketable securities and short-term VEBA
assets and/or availability under the revolving credit facility.
With respect to the borrowing base covenant, we are required to limit the outstanding amount of debt under the Credit
Agreement as well as certain permitted additional indebtedness secured by the collateral described above such that the
total debt outstanding does not exceed the value of the collateral as calculated in accordance with the Credit Agreement.
Events of Default. In addition to customary payment, representation, bankruptcy and judgment defaults, the Credit
Agreement contains cross-payment and cross-acceleration defaults with respect to other debt for borrowed money and a
change in control default.
2009 Secured Revolver Actions. Due to concerns about instability in the capital markets and the uncertain state of the
global economy, on February 3, 2009, we borrowed $10.1 billion under the revolving credit facility of the Credit Agreement
to ensure access to these funds. As expected, the $890 million commitment of Lehman Commercial Paper Inc. ("LCPI"),
one of the lenders under the facility, was not funded because LCPI filed for protection under Chapter 11 of the
U.S. Bankruptcy Code on October 5, 2008. LCPI subsequently assigned $110 million of its revolving commitment to other
lenders, and $89 million of these assignee lenders' revolving commitments were funded in the third quarter of 2009. On
July 10, 2009, we terminated the remaining LCPI commitment of $780 million.