(autoinsidernews) - Ford Motor today announced that it plans to acquire financing totaling approximately $18 billion in order to address the automaker's near- and medium-term negative cash flow, to fund its restructuring, and to provide added liquidity to protect against a recession or other unanticipated events, reports Trend.
Ford expects to burn through about $8 billion in cash in 2006. Without the financing package, it would finish the year with about $20 billion. Ford expects to complete the financing package by December 31. Once completed, the automaker expects to boost its liquidity to approximately $38 billion, consisting of cash and available credit lines. Up to $15 billion of the financing will be secured by liens against Ford's automotive assets.
On the plus side, equity owners do not have to worry about Ford running out of money in the next few years while new CEO Alan Mulally tries to fix the business, Credit Suisse analyst Chris Ceraso said. On the minus side, this could be an indication that the expected cash burn over the next couple of years is worse than the market currently anticipates.