Ford may issue more stock to cut debt

DEARBORN, Mich. -- Ford will likely trade more of its debt for equity and sell more common stock, so it can improve its balance sheet until the company can become profitable in 2011, CEO Alan Mulally said Thursday.

Speaking at an event to show Ford employees the company's new Taurus sedan, Mulally said the automaker will need to take its own actions to reduce debt and raise cash. General Motors and Chrysler were able to slash their debt and borrow billions of dollars as part of their government-backed filings for bankruptcy protection.

Ford raised $1.6 billion last month when it sold 345 million shares of common stock in a public offering. Earlier this year, the company completed tender offers that reduced its debt by more than one-third, retiring $9.9 billion in securities.

Mulally also said Ford's June sales are already on pace to improve from May's results.

Ford's May U.S. sales fell 24% from last year but didn't drop as much as most competitors. Ford's share of the U.S. market also rose to the highest level since 2006.

Ford executives said in 2006 that the company expected to return to full-year profitability in 2009. Yet as gasoline prices spiked toward $4 per gallon last May, Mulally backed away from that prediction.

When Ford reported a first-quarter loss of $1.4 billion in April, the company said it remains on track to break even or post a profit on a pre-tax basis in 2011.

Ford shares fell 6 cents to $6.13 in afternoon trading.