(Reuters) – Ford Motor Co FN said Friday it got approval to defer some quarterly payments owed on its U.S. Department of Energy retooling loan, but added it would repay the loan on time by June 2022.
In September 2009, Ford secured a low-cost $ 5.9 billion government loan, a major source of cash in the aftermath of the financial crisis.
The second-largest U.S. automaker said its loan was amended in June to reduce quarterly capital payments from $ 148 million to $ 37 million. Ford said it had $ 1.26 billion in principal remaining on the loan.
A spokeswoman for the Department of Energy said that “the flexibility that the Loan Programs Office was able to provide with this loan modification is a good example of what Secretary (of Energy) Brouillette meant. when he called for all of the ministry’s resources to support the energy industry during the covid19 pandemic. “
Ford said “with the continued economic uncertainty associated with COVID-19, we believe it is worthwhile to further strengthen our balance sheet and increase liquidity to maximize our financial flexibility.”
The company noted that if it chooses to pay a dividend, buy back shares above a certain threshold, or provide security to other lenders, it will have to revert to the original payment schedule.
The company said Friday that “deferring part of the principal until the maturity date will also incur additional interest charges for Ford, in addition to the cost of modifying the loan. All costs associated with the modification were covered by Ford through a higher interest rate. “
But he added that “the financing remains very profitable”.
Ford shares edged down 0.3% to $ 6.72.
Reporting by David Shepardson and Ben Klayman; Editing by Nick Zieminski and Grant McCool