Ford 2011 Annual Report Download - page 150

Notes to the Financial Statements
148 Ford Motor Company | 2011 Annual Report
NOTE 18. DEBT AND COMMITMENTS (Continued)
At December 31, 2010, we had outstanding $3 billion of 6.50% Subordinated Convertible Debentures due 2032
("Subordinated Convertible Debentures"), reported in Automotive long-term debt. The $3 billion of Subordinated
Convertible Debentures were held by Trust II, an unconsolidated entity, and were the sole assets of Trust II (for additional
discussion of Trust II, see Note 13).
At December 31, 2010, 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 were
convertible into shares of Ford Common Stock, based on a conversion rate (subject to adjustment) of 2.8769 shares per
$50 liquidation preference amount of Trust Preferred Securities (which is equal to a conversion price of $17.38 per share).
We guaranteed 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 had made a payment of interest or principal on the Subordinated Convertible
Debentures.
Secured Term Loan
2011 Secured Term Loan Actions. In the second and third quarters of 2011, we made optional prepayments of
$2.2 billion and $1.8 billion, respectively, to the term loan lenders under our secured Credit Agreement dated
December 15, 2006, as amended and restated on November 24, 2009 and as further amended (the "Credit Agreement").
In addition, in the second quarter of 2011 we also made a required payment of $67 million to the term lenders as a result
of the completion of the true-up of the purchase price adjustments related to the sale of Volvo. As a result, we have
repaid in full all amounts related to the term loans under our Credit Agreement.
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. On December 15, 2010,
we voluntarily paid $810 million on term loans that were scheduled to mature on December 15, 2013.
2009 Secured Term Loan Actions. In the first quarter of 2009, Ford Credit purchased from term loan lenders under
the Credit Agreement $2.2 billion principal amount of the secured term loan for an aggregate cost of $1.1 billion (including
transaction costs). Ford Credit distributed the repurchased secured term loan to its immediate parent, Ford Holdings,
whereupon the debt was forgiven. As a result of this transaction, we recorded a pre-tax gain of $1.1 billion in Automotive
interest income and other non-operating income/(expense), net.
Ford Leasing purchased from the lenders under the Credit Agreement $45 million principal amount of our secured
term loan thereunder for an aggregate cost of $37 million. Ford Holdings elected to receive the $37 million from Ford
Leasing as a dividend, whereupon the debt was immediately forgiven. As a result of this transaction, we recorded a pre-
tax gain of $8 million in Automotive interest income and other non-operating income/(expense), net.
Revolving Loan
2011 Secured Revolver Actions. In the second quarter of 2011, we made an optional prepayment of $838 million on
revolving loans under our Credit Agreement that were scheduled to mature on December 15, 2011.
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.