AFSCME 3357-HOF'S BLOG

Forbes:"Ford Bets the Farm"

Ford Motor Co. has taken out a $18 billion secured line of credit. Put the emphasis on the word "secured". Ford has pledged most of its North American assets to get $18 billion with which to implement it's way forward. According to Forbes.com, not only are the plants and machinery securing the loans, but Ford Motor Credit as well. Does this foreclose any selling of a minority interest in the finance company? It would appear so.

It seems to me that tying the substantial assets of Ford up with a single secured lender will make the company much easier to sell in bankruptcy compared to a situation with many creditors and a power vaccum. The secured creditor simply sells its interest to the suitor. The suitor makes a pitch to the bankruptcy court to buy out the claims of the small dollar creditors, and Ford becomes "New Ford". The suiter could be Renault/Nissan, the Ford family or whomever.

So how will we know if Ford's gamble works? You'll know it didn't work when you see a villainous character with a black top hat, black cape and handlebar mustache lurking around looking for people to tie to the railroad tracks.