NEW YORK, July 7 (LPC) - Ford Motor Co is in discussions with its lenders to extend maturities on US$5.35bn in existing credit facilities, two sources familiar with the discussions said.
The second-largest US automaker has reached out to lenders within its top 20 bank group for a one-year extension of its US$3.35bn three-year main corporate revolving credit facility and US$2bn three-year supplemental revolving credit facility.
The BB+/Ba1/BB+ automaker is seeking to refinance for the first time since downgrades in March removed its last investment grade rating.
The move will test banks’ willingness to lend to a US household name in an industry that has been hit hard by the coronavirus pandemic.
The company is offering an all-in spread of 225bp over Libor, split between a drawn spread of 175bp and an undrawn fee of 50bp for the main corporate and supplemental revolving credit facilities, one of the sources said.
All lenders who agree to the extension will receive a 40bp fee on the amount extended.
Lenders who choose not to extend will remain in the existing loans at a current all-in spread of 175bp over Libor, split between a drawn spread of 147.5bp and an undrawn fee of 27.5bp for the main corporate and supplemental revolving credit facilities.
The company is leaving unchanged its fully funded US$1.5bn supplemental term loan and a US$10.05bn five-year corporate revolving credit facility tranche.
JP Morgan leads the deal.
Ford reported a 33.3% drop in US sales in the second quarter tied to shutdowns and shelter-in-place orders due to the coronavirus, the company said in a July 2 press release.
Ford first reached out to its JP Morgan-led bank group in February to refinance US$15.4bn in revolving credits but in March decided to draw down on the facility and postponed its refinancing plans as market conditions deteriorated, two banking sources said at the time.
Ford drew US$13.4bn under its corporate credit facility - including the three-year corporate revolver it is seeking to extend - as well as US$2bn under its three-year supplemental credit facility, for a total of US$15.4bn. The company said borrowings would be used to “offset the temporary working capital impacts of the coronavirus-related production shutdowns and to preserve Ford’s financial flexibility,” according to a March 19 press release.
Commitments on the current extension request are due July 22.
A JP Morgan spokesperson declined to comment. Emails to a Ford media relations representative were not returned by press time. (Reported by Michelle Sierra. Edited by Kristen Haunss.)