DBRS Comments on Ford’s Potential Sale of Volvo to Geely

DBRS notes that Ford Motor Company (Ford or the Company) has today announced that it has reached a settlement with respect to all substantive commercial terms regarding the potential sale of Volvo Car Corporation (Volvo) to Zhejiang Geely Holding Group Company Limited (Geely). DBRS notes that the Company’s announcement is not unexpected, with Ford disclosing in October 2009 that Geely was its preferred bidder for Volvo.

While DBRS considers the likely sale of Volvo to be modestly beneficial to Ford, it is not sufficiently material to warrant any rating action, with the Company’s ratings remaining unchanged including the Issuer Rating of B (low) with a Stable trend. The pending sale of Volvo follows the Company’s previous divestitures of its Aston Martin and Jaguar Land Rover operations and is wholly consistent with the ONE Ford strategy intended to enable senior management to focus on the continuing revitalization of the global Ford brand. Additionally, the sale effectively removes any further capital investments of Ford required to fund Volvo’s operations, with sale proceeds further bolstering Ford’s liquidity, which would appear be readily sufficient over the near term given the Company’s much reduced use of cash in 2009.

Ford anticipates the signing of a definitive sale agreement in the first quarter of 2010, with the closing of the sale expected in the subsequent quarter, subject to appropriate regulatory approvals.

Note:

The applicable methodology is Rating Automotive, which can be found on our web site under Methodologies.

This is a Corporate (Autos & Auto Parts) rating.