Debt Upgrade to Investment Status Restores Blue Oval to Ford Ownership, GM Upgrade Expected

It's almost a cliche. Someone mentions the $23.5 loan package that Ford Motor Company presciently took out in 2006, a loan that allowed Ford to develop new products and survive the economic meltdown and credit crunch of 2008 while its crosstown rivals were reduced to begging Washington for a bailout, and almost invariably they will bring up the fact that Ford pawned everything including their "blue oval". Well, Ford once again owns the famous cerulean logo free and clear. Now that Moody's has joined Fitch Ratings in restoring the rating on Ford's debt to investment grade from junk status, the collateral that Ford put up for the loan, which included the logo, Ford's "glass house" headquarters, several factories, and intellectual property including the Mustang and F-150 trademarks, is no longer security on that debt, per the terms of the loan. Ford Chairman Bill Ford Jr., the great grandson of Ford founder Henry Ford, said, "The Ford Blue Oval is back where it belongs with the Ford family of 166,000 employees around the world. This is a great day for us and is the result of several years of hard work and progress by everyone associated with Ford." The hocking of the Blue Oval was a hugely symbolic step for Ford to take, emblematic of the straits the company faced. Ford Jr. said that the logo was more than an asset. "We pledged our heritage." Ford CEO Alan Mullaly, who relied on the advice of now retiring CFO Lewis Booth in taking out the loans, had described them earlier as "the world's biggest home improvement loan." In a statement (full statement below) announcing the debt upgrade, Mullaly and Ford said, "Moving forward, we will continue to focus on driving profitable growth for all of our stakeholders. We are confident that, by staying focused on our plan and working together, we will maintain strong investment-grade ratings through all economic cycles." Under Mullaly's leadership, Ford has returned to profitability and the Dearborn automaker has hacked away at its debt in huge chunks. Ford's current debt stands at $5.9 billion. In other credit rating news, Moody's continued General Motor's Ba1 rating, saying that they expect GM to be upgraded to investment-grade status within a year. "GM's credit quality continues to improve and the company remains on track to regain an investment-grade credit rating over the course of the next 12 months," said Bruce Clark, Moody's chief analyst for the North American auto industry. The credit rating company listed GM's performance in North America and China as upsides, with the company facing challenges in Europe and continued concern over pensions, GM Financial, and the consequences of the U.S. Treasury Department's stake in the automaker. From: Bill Ford and Alan Mulally Sent: Tuesday, May 22, 2012 3:50 PM To: The Ford Team Subject: Investment Grade This afternoon, Moody's Investors Service announced its decision to upgrade Ford Motor Company to Baa3 with stable outlook, or investment grade. This is a significant milestone for all of us and the result of several years of hard work and progress by everyone associated with Ford. We all can be very proud of today's decision by Moody's and the resulting release of the collateral securing the loans we took out in 2006 — particularly the Ford Blue Oval. This is further proof that, by staying laser-focused on our One Ford plan, the Ford team can deliver great products, build a strong business and contribute to a better world even through the most challenging external environment. When we pledged the Ford Blue Oval as part of the loan package, we were not just pledging an asset. We pledged our heritage. The Ford Blue Oval is one of the most recognized symbols in the world, and it is a source of great pride and passion, both inside and outside our company. Moving forward, we will continue to focus on driving profitable growth for all of our stakeholders. We are confident that, by staying focused on our plan and working together, we will maintain strong investment grade ratings through all economic cycles. The Ford Blue Oval is back where it belongs. This is a great day for everyone associated with our company. Congratulations and thank you! Bill and Alan Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can dig deeper at Cars In Depth. If the 3D thing freaks you out, don't worry, all the photo and video players in use at the site have mono options. Thanks for reading – RJS from The Truth About Cars http://www.thetruthaboutcars.com

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