Ford Slashes Debt by More Than $4 Billion
Ford Motor Co. said Wednesday it is reducing its debt by more than $4 billion, a sign the automaker remains confident in its turnaround despite a softening U.S. car market, The Wall Street Journal reported.
The bulk of the debt reduction comes from paying down funds owed to a trust set up to provide health care to retired members of the United Auto Workers. Ford's remaining obligation to the union trust is $3.6 billion.
Ford agreed in 2008 to pay cash to cover the trust's expenses, but the agreement later was amended to allow payments in Ford stock. Still, the company decided to pay cash in Wednesday's move.
Ford's high level of debt has been hanging over the otherwise good news from the car maker this year. The payments leave Ford with about $27 billion in debt, much stemming from when it took out massive loans several years ago to tide it through the expected industry downturn.
By comparison, General Motors Co. had $8.4 billion in debt and Chrysler Group LLC had $3.8 billion in debt, according to company figures updated in April, excluding pension obligations. Both competitors cleaned up their balance sheets in bankruptcy court last year.
While Ford plans to continue paying down obligations, it may take on more debt as it accepts U.S. government loans designed to help its move to more fuel-efficient cars and trucks.
The payments Ford announced Wednesday will reduce its cash to $23.7 billion.
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