I don't have a position, and don't shoot the messenger, but I just wanted to let the F-A holders know that this offer is unlikely to cash them out at $7.50. The reason? Ford is only allocating $1.3B to buy up amounts that, if everyone tendered, would be worth $2.7B. So, if more than $1.3B worth is tendered, how do they decide who gets how much? The answer lies in the column labeled "Acceptance Priority Level" in the table on one of the first pages of the offer (page ii). F-A is the fifth-to-last security listed on that page (Cusip #345370852) and it is listed in the lowest Priority Level, Level 3. This means that if all of the holders of the first two securities in Levels 1 and 2 tender their securities, the folks who own Level 3 will get a zero allocation from this offer.
OK, having said all that, what do I think? F-A will definitely trade up tomorrow, probably fairly agressively. If you can get $7 tomorrow and you are inclined to take the offer, you may want to take $7 from a buyer tomorrow. Alternately, you could decline the offer and remain a debt-holder and continue to receive your interest distributions (as long as Ford remains solvent). If Ford can turn things around by retiring some debt for pennies on the dollar and by its various cost-cutting initiative, it may turn out that anyone who declines this offer might continue to collect $1.875 per year for another 34 years.
Again, I have no position here and am just offering some analysis for those who do. I would buy this tomorrow under $5.50 and sell over $6.50. Best of luck.
Excellent summary, Portland! Because of our low priority, I don't think that we holders of F-PRA will be able to profit DIRECTLY from this tender. However, it will most definitely have a "halo" effect - even after the initial wild enthusiasm dies down a little bit. I am going to contact my broker (M-L) to set things up, just in case.
Having said that: I would tend to believe that SMALL retail holders might be inclined to hold on to their shares of F-PRA, while those who loaded up might do well to "cash in their chips" (if possible) for a one-time big pay-off.
In any case, I think that this tender is prima facie evidence that FORD is in better shape than the market as a whole believes. As a holder of FORD common stock, too, I am likewise heartened by this development.
I too have a stake in the F-S and another unnamed prefered. There is nothing saying you have to sell this back to ford or any of the debts/securities listed. I bought these longand will coninue to hold those quick dollar traders out there are hppier than heck right now I am sure but how many 5k or 1k bonds do you think will cash out at 30%. Perhaps the holders of these are insolvent so they will be glad to cash out but I doubt it. I am glad ford is doing this perhaps they will retire enough debt to care on with paying me my interest payments all be it accured.