DEARBORN, Mich. -

Ford announced actions late last week that it says will allow the automaker to cut close to $3 billion away from its debt.

Specifically, Ford revealed that it will redeem the entire the $2.98 billion aggregate principal amount outstanding of its 6.50 percent Junior Subordinated Convertible Debentures held by Ford Motor Co. Capital Trust II for cash, a move that aligns with Ford’s efforts to continue bolstering its balance sheet.

Consequently, the Ford Motor Co. Capital Trust II will then redeem all of its outstanding 6.5 percent Cumulative Convertible Trust Preferred Securities for cash. That will take place on March 15.

“Instead of having trust preferred securities redeemed for cash, holders may convert their trust preferred securities at any time until 5 p.m. EDT, March 14, 2011, into shares of Ford common stock at a rate of 2.8769 shares per trust preferred security (liquidation amount $50 per trust preferred security) converted (equivalent to a conversion price of $17.38 per share of Ford common stock),” Ford explained in a statement.

Ford said that theses securities being redeemed or converted will trim about $3 billion in the company’s automotive debt. Moreover, it will also lead to lower annualized interest of around $190 million. Also, another result from redemption will be in a first-quarter charge that could be as much as $60 million, according to the company.

“We remain focused on reducing our automotive debt as the core automotive business continues to strengthen,” said Lewis Booth, Ford executive vice president and chief financial officer.

“We are pleased with the progress we have made, and we are committed to continuing to improve our balance sheet to lay a solid foundation for a strong and profitably growing business in years to come,” he added.

Trust Preferred Redemption Specifics

Moving along, Ford also shared more details regarding the trust preferred redemption. The company indicated that the cash redemption price on the trust preferred securities is $50.33 per $50 liquidation amount. On top of that, there are accrued and unpaid distributions to the redemption date of $0.5416667 per security.

“Consistent with the terms of the Amended and Restated Declaration of Trust of Ford Motor Company Capital Trust II, no record date will be established with respect to the March 15, 2011 redemption. The redemption price and accrued distributions will be payable to the holder of the trust preferred securities upon presentation and surrender of the securities on or after the redemption date at the offices of the redemption and paying agent,” the company explained. “Distributions will no longer accrue after the March 15, 2011 redemption date.”

Ford also stressed that the New York Stock Exchange has indicated that March 8 will be the final day the NYSE will have trading in the trust preferred securities.

This is to ensure “that all trades settle prior to the termination of holders’ conversion rights.”

Ford’s statement added: “To exercise the conversion right, a holder of the trust preferred securities must surrender the securities together with an irrevocable conversion notice to Computershare Trust Co., N.A., in its capacity as the conversion agent, before 5 p.m. EDT on March 14, 2011 at one of the addresses below,” then providing those addresses as follows:

By Mail:

Computershare Trust Company N.A.
Corporate Actions
P.O. Box 43014
Providence, RI 02940-3014

By Overnight Mail:
Computershare Trust Company N.A.
Corporate Actions
250 Royall Street
Canton, MA 02021

The transfer agent for the trust preferred securities is Computershare Trust Co., N.A.  This company will also act as the redemption and paying agent for this transaction. The address for Computershare is as follows:

250 Royall Street
Canton, MA, 02021.

Ford encouraged holders of trust preferred securities who have questions about the redemption to call Computershare at (800) 541-5141.