Ford 2006 Annual Report Download - page 75

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73
Notes to the Financial Statements
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73
NOTE 15. DEBT AND COMMITMENTS (Continued)
Senior Indebtedness
On December 15, 2006, we issued $4.95 billion in principal amount of unsecured Senior Convertible Notes (the
"Convertible Notes") due 2036. The Convertible Notes pay interest semiannually at a rate of 4.25% per annum. The
Convertible Notes are convertible into shares of our Common Stock, based on a conversion rate (subject to adjustment)
of 108.6957 shares per $1,000 principal amount of Convertible Notes (which is equal to a conversion price of $9.20 per
share, representing a 25% conversion premium based on the closing price of $7.36 per share on December 6, 2006).
Holders may require us to purchase all or a portion of the Convertible Notes for cash on December 20, 2016 and
December 15, 2026 or upon a change in control of the Company or for shares of our Common Stock upon a designated
event, in each case for a price equal to 100% of the principal amount of the Convertible Notes being repurchased, plus
any accrued and unpaid interest to, but not including, the date of repurchase. We may redeem for cash all or a portion of
the Convertible Notes at our option at any time or from time to time on or after December 20, 2016 at a price equal to
100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but not
including, the redemption date. We may also terminate the conversion rights at any time on or after December 20, 2013 if
the closing price of our Common Stock exceeds 140% of the then prevailing conversion price for twenty trading days
during any consecutive thirty trading day period.
Subordinated Indebtedness
Ford Motor Company Capital Trust II, a subsidiary trust ("Trust II"), has outstanding 6.50% Cumulative Convertible
Trust Preferred Securities with an aggregate liquidation preference of $5.0 billion (the "Trust II Preferred Securities"). The
sole assets of Trust II are $5.2 billion principal amount of 6.50% Junior Subordinated Debentures due 2032 of Ford Motor
Company (the "Subordinated Debentures"). At our option, we may redeem the Subordinated Debentures, in whole or in
part, on or after January 15, 2007. To the extent we redeem the Subordinated Debentures or upon the maturity of the
Subordinated Debentures, Trust II is required to redeem the Trust II Preferred Securities at $50 per share plus accrued
and unpaid distributions. We guarantee the payment of all distribution and other payments of the Trust II Preferred
Securities to the extent not paid by Trust II, but only if and to the extent we have made a payment of interest or principal
on the Subordinated Debentures. Trust II is not consolidated by us as it is a VIE in which we do not have a significant
variable interest and of which we are not the primary beneficiary.
Credit Facilities*
Automotive Sector
Secured Credit Facilities
On December 15, 2006, we entered into an agreement (the "Credit Agreement") which provides for a seven-year
$7 billion term-loan facility and a five-year revolving credit facility of $11.5 billion. At December 31, 2006, $11.1 billion of
the revolving credit facility was available for use. 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 Ford VHC AB, a holding
__________
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