US automotive giant Ford Motor Company has just withdrawn its 2020 guidance and announced that it will be suspending its dividend until further notice. The announcement made on Thursday is meant to give the company ample time to shore up its finances and asses its business amid the ongoing uncertainties brought about the viral epidemic.
To acquire the needed capital to deal with the crisis, Ford revealed that it plans to draw up to $15.4 billion from two credit lines. The automaker revealed that it will be borrowing around $13.4 billion under its corporate credit facility. The rest of the amount it needs will be taken from other supplemental credit facilities.
Ford CEO Jim Hackett mentioned in a statement that the company is taking action similar to what it had done during the Great Recession. He added that the decisions that it was forced to make due to the viral outbreak should ensure the survival of its business and safeguard its workforce, customers, and dealers worldwide.
Similar to what happened to the company during previous recessions, Ford is confident that it can emerge from the current crisis as a much stronger company that can contribute to the recovery of the United States economy.
Following the news of the withdrawal of its dividend, Ford's share prices plummeted by more than 5.2 percent during mid-afternoon trading on Thursday. The company's shares ended the trading day at $4.26 apiece.
In a previous filing, Ford had revealed that it had around $35 billion in liquidity and around $22 billion in cash at the end of 2019. The company's decision to draw an additional $15.4 billion from its credit lines is its way of hoarding cash to its balance sheets, which has been greatly affected by its shutdown of production in its key markets.
The move should give Ford more than $37 billion in cash, a figure that matches its reported revenue for its fourth quarter last year.
In a surprising move by the automaker, the company had announced that it will be providing support and financial relief for its customers during this crisis. Ford and its dealers across the United States will reportedly be footing the bill for up to three months' worth of customer car payments. New car buyers will also be given up to six months of payment relief. The program will apply to all customers purchasing its 2019 and 2020-model vehicles, with the exception of its 2020 Super Duty trucks.
