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Ford Plans $18 Billion in Debt, Some Backed by Plants
Nov. 27 (Bloomberg) -- Ford Motor Co., struggling to overcome record losses this year, will borrow $18 billion and plans to back its loans with collateral for the first time.

New Chief Executive Officer Alan Mulally must raise cash to pay for cutting more than 40,000 jobs and closing factories in North America, where falling sales have caused losses in eight of the past nine quarters at the automotive unit. General Motors Corp. also used collateral on loans for the first time this year.

About $15 billion of the new debt will be secured by collateral, Ford said in a statement. An $8 billion secured credit line will replace an unsecured $6.3 billion loan. For collateral, the company is using U.S. plants, other U.S. automotive assets and ``all or a portion' of profitable units such as Ford Motor Credit Co. and Volvo. JPMorgan Chase & Co., Citigroup Inc. and Goldman Sachs Group Inc. are arranging the financing, which will be completed by Dec. 31, Ford said.

Moody's Investors Service lowered Ford's unsecured debt rating today to Caa1, seven steps below investment grade, citing less protection for investors in case of a default. Fitch Ratings cut the unsecured rating to B, five steps below investment grade. The company lost $6.99 billion in the first nine months of 2006, and its share of the U.S. market will decline for the 11th consecutive year.

``They realize they're in worse shape than they thought and it's going to take a long time to fix this,' said Shelly Lombard, a Montclair, New Jersey-based debt analyst at Gimme Credit Publications.
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