DEARBORN, Mich., April 6 (UPI) -- U.S. auto giant Ford Motor Co. said Monday it would reduce its automotive debt 38 percent, trimming its annual interest payments by $500 million.
The announcement gave the company a quick market boost, with share values jumping 15 percent early in the day, the Detroit Free Press reported.
The company said that along with Ford Motor Credit it would use $2.4 billion in cash and 468 million shares to buy back bond and debt obligations set up through three tender offers made March 4.
Ford said the transactions, covering $9.9 billion in debt, would allow it to reduce its automotive debt from $25.8 billion to $15.9 billion.
"By substantially reducing our debt, Ford is taking another step toward creating an exciting, viable enterprise," company President and Chief Executive Officer Alan Mulally said in a statement.
The swap, combined with an agreement Ford made with the United Auto Workers union to reduce cash expenses, will help Ford survive without government assistance, the newspaper said.
Ford's U.S. rivals General Motors Corp. and Chrysler LLC have accepted $17.4 billion in emergency federal loans, and they continue to seek agreements from both creditors and the UAW that are considered critical during a prolonged slump in automobile sales.
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