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Monday, 27 July 2020 23:03

Report: Ford Gets 1-Year Extension on Billions in Loans

Written by Eric D. Lawrence, Detroit Free Press

Ford has secured some additional breathing room as it tries to navigate the ongoing global financial crisis.

The Dearborn, MI, automaker has gotten commitments from enough banks for a one-year extension on the bulk of revolving loans totaling about $5.35 billion, according to Reuters, which said JP Morgan was leading the effort.

 

The news service, citing sources close to the transaction, noted that Ford has been trying since early this month to get the maturity extensions on two different three-year credit facilities, one for $3.35 billion and another for $2 billion.

 

Ford and other automakers have been hit hard by the toll the COVID-19 pandemic has taken on the global economy, and Ford said it lost $2 billion in the first quarter of the year. Ford, of course, is not alone, and numerous other automakers reported bleak sales and earnings for the first part of the year.

 

The company is scheduled to release its second quarter earnings soon. Reuters said more banks could agree to an extension before the close of the deal on July 27, which would allow for some positive news ahead of the earnings release.

 

Carlene Lule, a spokesperson for J.P. Morgan Chase, declined to comment.

 

A Ford spokesman did not immediately return a message seeking comment.

 

Ford's CFO Tim Stone said earlier the company believes it has enough money to get through the end of the year. Ford had $34 billion in cash on hand and $35 billion in liquidity at the end of the first quarter, the Free Press reported in April.

 

The move to secure loan extensions as Ford has done, however, is not surprising. Experts have said companies like Ford would aggressively try to improve their cash positions because of the experience from the previous financial crisis when it became very difficult to borrow money.

 

We thank the Detroit Free Press for reprint permission. 

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