Ford 2009 Annual Report Download - page 133

Notes to the Financial Statements
Ford Motor Company | 2009 Annual Report 131
NOTE 19. DEBT AND COMMITMENTS (Continued)
Convertible Notes due December 15, 2016
On November 9, 2009, we issued $2.875 billion principal of our 2016 Convertible Notes. This issuance included
$2.5 billion from the original offering on November 3,
2009 and $375 million from the underwriters option to purchase
additional convertible notes exercised on November 6, 2009 ("Over-Allotment Option"). The 2016 Convertible Notes pay
interest semiannually at a rate of 4.25% per annum. The 2016 Convertible Notes are convertible into shares of Ford
Common Stock, based on a conversion rate (subject to adjustment) of 107.5269 shares per $1,000 principal amount of
2016 Convertible Notes (which is equal to a conversion price of $9.30 per share, representing a 25% conversion premium
based on the closing price of $7.44 per share on November 3, 2009).
Upon conversion, we have the right to deliver, in lieu of shares of Ford Common Stock, cash or a combination of cash
and Ford Common Stock. Holders may require us to purchase all or a portion of the 2016 Convertible Notes upon a change
in control of the Company, or for shares of Ford Common Stock upon a designated event that is not a change in control, in
each case for a price equal to 100% of the principal amount of the 2016 Convertible Notes being repurchased plus any
accrued and unpaid interest to, but not including, the date of repurchase. We also may terminate the conversion rights at
any time on or after November 20, 2014 if the closing price of Ford Common Stock exceeds 130% of the then-applicable
conversion price for 20 trading days during any consecutive 30-trading day period.
Liability and equity components of our 2016 Convertible Notes at December 31 are summarized as follows (in millions):
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The discount on the liability components of the 2016 Convertible Notes will amortize through November 16, 2016. The
total effective rate on the liability component was 9.2% on the original offering and 8.6% on the Over-Allotment Option. If
all $2.9 billion of 2016 Convertible Notes were converted into shares as of December 31, 2009 at a share price of $10.00,
the share value would exceed the principal value of debt by $216 million.
Subordinated Convertible Debentures
At December 31, 2009, we had outstanding $3 billion of 6.50% Junior Subordinated Convertible Debentures due 2032
("Subordinated Convertible Debentures") and $140 million of deferred interest, reported in Automotive long-term debt.
The $3 billion of Subordinated Convertible Debentures are due to Trust II, a subsidiary trust, and are the sole assets of
Trust II. As of January 15, 2007, the Subordinated Convertible Debentures have become redeemable at our option. 
At December 31, 2009, Trust II had outstanding 6.50% Cumulative Convertible Trust Preferred Securities with an
aggregate liquidation preference of $2.8 billion ("Trust Preferred Securities"). The Trust Preferred Securities are
convertible into shares of Ford Common Stock, based on a conversion rate (subject to adjustment) of 2.8769 shares per
$50 principal amount of Trust Preferred Securities (which is equal to a conversion price of $17.38 per share). We
guarantee the payment of all distribution and other payments of the Trust 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 Convertible
Debentures. As announced on March 27, 2009, we elected to defer future interest payments related to the Trust
Preferred Securities for up to 5 years. 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.