Ford was forced to pawn the family jewels yesterday for the first time in its 104-year history as the troubled carmaker sought to borrow $18 billion (£9.3 billion), using its factories, cash in the bank and other assets as security.

Mounting pressures from dwindling sales and profits, increased competition from Asia, a weakening dollar and an ever-deteriorating credit rating have combined to force Ford into using its prized assets to borrow money.

Ford, which had total debts of $17.7 billion at the end of September, is seeking to replace a $6.3 billion unsecured credit facility with a new $8 billion five-year secured credit facility, the company said.

Ford also revealed plans to issue a senior secured term loan of $7 billion along with $3 billion of other debt, some of which may be linked to Ford stock.

The company said that the massive debt, more than $12 billion of which is new, would be secured by all of its US manufacturing facilities; “substantially all” of its other US automotive assets; shares in several subsidiaries, including Volvo and Ford Credit; property such as offices; and intellectual property, such as brands and patented ideas.

The borrowed cash will be used to shore up Ford’s ailing balance sheet and to fund its massive restructuring plan, which aims to cut more than 30,000 jobs and close more than a dozen factories.

Ford added that the remainder of the borrowings would be used as a “cushion” against recession if one were needed.

Lenders have never before required the historic carmaker, to back up its loans with assets but its finances have become so dire that Wall Street analysts doubt whether Ford would have been able to raise such a large amount of debt without some kind of surety.

Gregg Lemos-Stein, an analyst with Standard & Poor’s who covers Ford’s debt, said that Ford did not choose to secure its debt but rather was forced to do so because of its junk credit rating.

“I do not know if Ford in its current financial condition would even have been able to raise a borrowing of this magnitude without security,” Mr Lemos-Stein said.

Standard & Poor’s left Ford’s main credit rating unchanged after the debt refinancing was announced but downgraded its unsecured debt further into junk status.

Ford’s remaining unsecured debt was rated CCC+, two notches lower than the previous B, because, Mr Lemos-Stein said, holders face substantial new risks. “We do not see a risk of default particularly,” he said, “but the unsecured creditors would now be at a significant disadvantage to the new secured creditors in the event of a bankruptcy.”

If Ford were to go bankrupt after issuing the secured debt, the company would be obliged under Chapter 11 bankruptcy rules to pay back the $15 billion or so of secured debt before considering paying back the unsecured creditors.

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