Chapter 11 for Ford ?

[Carroll DeWeese]

Here is an article from the Detroit Free Press about an analyst downplaying Ford's bankruptcy woes.

"Analyst Downplays Ford's Woes
Critic dismisses suggestion of possible bankruptcy
Detroit Free Press
March 13, 2003
By Jamie Butters

A Wall Street critic of Ford Motor Co.'s turnaround plan says the Dearborn automaker's stock has fallen far enough amid "simply unrealistic" bankruptcy fears.

With Ford shares near the $6.50 price he sees as fair, analyst Saul Rubin of UBS Warburg upgraded his rating on the stock Wednesday from "reduce" to "neutral" -- in effect, advising investors to hold onto Ford shares rather than sell or buy them.

Ford shares gained 48 cents, or 7.3 percent, to close at $7.08 Wednesday.

Small credit-rating agency Egan-Jones Ratings Co. has said Ford could be pushed into bankruptcy by the huge debts of its credit company and the ballooning shortfall in pension and retiree health-care accounts.

But Rubin dismisses these arguments. Ford Credit's debt is balanced by loans it makes to Ford customers, so at worst those wash each other out, he said.

Excluding the banking business, Ford's debt at the start of the year was $19 billion -- less than Ford's $25 billion in cash. And very little of that debt is due in the next 10 years, Rubin said.

"Even when assuming a hefty annual cash burn -- and we do -- on top of fairly significant pension fund contributions -- and, again, we do -- Ford would still have at least four to five years or so in our opinion" before it could face a cash crunch.

Even then, it has many assets that could be sold.

Ford executives say Egan-Jones is willfully misinterpreting the relationship between Ford's automaking and financing units.

Managing director Sean Egan said he has "encouraged them to send us information," as long as it is available to all investors.

"That is absolutely not true," said Bibiana Boerio, director of finance and strategy for Ford's international operation. "He has chosen not to utilize that information."

Egan's report, along with a continuing stream of other bad news, pushed Ford stock to almost a 10-year low Tuesday before rebounding Wednesday. Concerns include: a possible credit-rating downgrade by Standard & Poor's Corp., no guidance for second quarter production and the flap over chief operating officer Nick Scheele's order, later rescinded, to award all advertising business to one company.

Rubin says he continues to believe Ford is the weakest automaker in the crucial North American market, and he questions whether results in Europe would grow as much as most investors hope. "In short, we are no more positive on Ford today than we have been for quite some time.""