Ford draws-down full $15bn credit line to weather Covid-19 storm
CEO vows that firm will emerge stronger from Covid-19 crisis
Ford has announced further measures that it hopes will help it weather the economic storm triggered by the ongoing coronavirus outbreak.
The automaker has seen its share price fall more than 53 per cent in 2020, in early-afternoon trading (EST) it stands at $4.32 down 4.00 per cent.
It informed lenders that it will use the total unused amounts of two lines of already-secured credit, $13.4bn (£11.4bn, €12.5bn) through its corporate credit facility and $2bn under its supplemental credit facility.
Observers have noted the similarity between the ongoing Covid-19 crisis in 2020 and the global financial crisis in 2008, in which multiple companies rushed to secure funding before credit freezes could be imposed.
Boeing has already drawn on its full $13.8bn credit line, with private equity behemoths, the Carlyle Group (CG) and the Blackstone Group (BX), both encouraging their portfolio companies to do the same.
On Wednesday Detroit’s ‘Big Three’ car manufacturers suspended domestic production, following pressure from the United Auto Workers (UAW) union to safeguard employee safety.
With the world’s largest car market, China, in effective lockdown for the past two months, manufacturers across the world have faced both falling demand and disrupted supply chains.
In order to cope with this pressure and the production halt in the U.S. Ford announced its intention to preserve its cash pile and manoeuvrability by suspending its dividend payment.
The company’s CEO Jim Hackett stated: “As America’s largest producer of vehicles and largest employer of autoworkers, we plan to emerge from this crisis as a stronger company that can be an engine for the recovery of the economy moving forward.”
However, with Ford withdrawing its 2020 guidance, it is unclear how long the automaker will take to emerge from the ongoing crisis.
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