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U.S. markets recover from steep losses
DEARBORN, Mich., Aug. 16 (UPI) -- Ford Motor Co. plans to improve its financial health by selling as much as $500 million of its shares to buy back debt from its credit arm, a U.S. filing shows.
The Dearborn, Mich., automaker's finances took a tumble after a recent $2.1 billion write-down blamed on declining resale values of trucks and sport-utility vehicles, The Wall Street Journal reported Saturday.
Ford posted a loss of $8.7 billion in its second quarter.
The newspaper reported Ford will sell the stock to buy down Ford Motor Credit's debt that is due before 2012.
Ford disclosed its plans in a filing with the U.S. Securities and Exchange Commission Thursday.
Analysts say Ford could turn a small profit by buying back its debt at a discount.
"Building equity is constructive," said Bruce Clark, a senior vice president at Moody's Investors Service. "But in no way is it going to have a material effect on the overall credit profile."
Another credit rating agency, Standard & Poor's Ratings Services, said its negative ratings on Ford wouldn't be affected by a stock sale.
"We would view such purchases as a modest positive for Ford's consolidated credit quality," Standard & Poor's said in a statement.
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