Ford 2010 Annual Report Download - page 144

Notes to the Financial Statements
142 Ford Motor Company | 2010 Annual Report
NOTE 19. DEBT AND COMMITMENTS (Continued)
Subordinated Convertible Debentures
At December 31, 2010, we had outstanding $3 billion of 6.50% Junior Subordinated Convertible Debentures due 2032
("Subordinated Convertible Debentures"), reported in Automotive long-term debt. The $3 billion of Subordinated
Convertible Debentures are due to Trust II, an unconsolidated entity, and are the sole assets of Trust II (for additional
discussion of Trust II, see Note 7). As of January 15, 2007, the Subordinated Convertible Debentures have become
redeemable at our option. 
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 are
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 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.
2010 Actions. As announced on March 27, 2009, we elected to defer future interest payments on the Subordinated
Convertible Debentures. On June 30, 2010, we paid in cash to the trustee of Trust II all accrued distributions previously
deferred, totaling $255 million. This amount was paid by Trust II on July 15, 2010 to holders of the Trust Preferred
Securities, thereby bringing current distributions on those securities. In addition, we reinstated the quarterly interest
payment on the Subordinated Convertible Debentures, and Trust II reinstated the quarterly distribution payment on the
Trust Preferred Securities, starting with the payment due on July 15, 2010.
2009 Conversions. In the first quarter of 2009, pursuant to a request for conversion, we issued an aggregate of
2,437,562 shares of Ford Common Stock, par value $0.01 per share, in exchange for $43 million principal amount of our
Subordinated Convertible Debentures.
Subsequent Event – 2011 Redemption. On February 10, 2011, we provided notice to the property trustee of Trust II
that we will redeem in whole the Subordinated Convertible Debentures due to Trust II on the redemption date of
March 15, 2011, at a price of $100.66 per $100 principal amount of such debentures, plus accrued and unpaid interest to
and including the redemption date of $1.08 per debenture. The proceeds from the redemption of the
Subordinated Convertible Debentures will be used by Trust II to redeem in whole the Trust Preferred Securities on the
redemption date of March 15, 2011, at a price of $50.33 per $50 liquidation preference of such securities, plus accrued
and unpaid distributions to the redemption date of $0.54 per security. Until March 14, 2011, the Trust Preferred Securities
are convertible into shares of Ford Common Stock, based on a conversion rate of 2.8769 shares per $50 liquidation
preference of Trust Preferred Securities, equivalent to a conversion price of $17.38 per share of Ford Common Stock.
Redemption of these securities will result in a reduction of about $3 billion in Automotive debt and lower annualized
interest costs of about $190 million. It also will result in a 2011 first quarter pre-tax charge of about $60 million, assuming
none of the Trust Preferred Securities are converted. The impact of any conversion of Trust Preferred Securities into
shares of Ford Common Stock already is reflected in our fully-diluted full-year earnings per share calculation. To the
extent the Trust Preferred Securities are redeemed and not converted, the amount of dilutive shares outstanding will be
reduced.
Secured Term Loan and Revolving Loan
Pursuant to our Credit Agreement, at December 31, 2010, we had outstanding:
• $4.1 billion of a secured term loan maturing on December 15, 2013. The term loan principal amount amortizes
at a rate of $77 million (1% of original loan) per annum and bears interest at LIBOR plus a margin of 2.75%;
• $838 million of revolving loans maturing on December 15, 2011, which bear interest of LIBOR plus a margin of
1.125% (which margin was reduced to 1% as of February 2, 2011).