Ford 2010 Annual Report Download - page 145

Notes to the Financial Statements
Ford Motor Company | 2010 Annual Report 143
NOTE 19. DEBT AND COMMITMENTS (Continued)
On February 1, 2011, the issue-level credit rating and recovery rating on our senior secured debt was raised by one of
the nationally recognized statistical rating organizations ("NRSROs") that rates our debt. As a result, pursuant to the
Credit Agreement, the margin over LIBOR on these issues was reduced as noted above.
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); an intercompany note of Ford Motor Company of Canada,
Limited; 66% to 100% of the stock of all major first tier foreign subsidiaries; 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.
2010 Secured Revolver Actions. On April 6, 2010, September 9, 2010, and December 15, 2010, we paid $3 billion,
$2 billion, and $1.7 billion, respectively, on revolving loans that were scheduled to mature on November 30, 2013. Such
amounts will remain available for borrowing through November 2013 as the commitments of the revolving lenders were
not reduced.
At December 31, 2010, $838 million of the $8.1 billion combined revolving facilities has been drawn. In addition,
$374 million was utilized in the form of letters of credit, leaving $6.9 billion available to be drawn.
2010 Secured Term Loan Actions. Pursuant to the requirement to use a portion of the cash proceeds from the sale of
Volvo upon the closing thereof to partially prepay certain outstanding term loans under the Credit Agreement, we paid
$288 million to the term loan lenders on August 3, 2010 following completion of the sale of Volvo. Upon settlement of the
final true-up of the purchase price adjustments, we will be required to pay an estimated $63 million to the term loan
lenders. As a result, at December 31, 2010, $63 million of term loans were reflected in the Automotive sector as
Debt payable within one year. See Note 13 for additional detail regarding the sale of Volvo.
On December 15, 2010, we voluntarily paid $810 million on term loans that were scheduled to mature on
December 15, 2013.