Ford Motor Company (NYSE:F) suspended its dividend and borrowed billions of dollars from its existing credit lines, as it prepares to shut down most of its factories in North America and Europe.
Ford said that it is borrowing $15.4 billion in total, the remaining amounts on two existing lines of credit. The company has also suspended payment of its $0.15-per-share quarterly dividend in order to conserve cash.
Ford paid out about $2.4 billion in dividends in 2019.
Ford said that the moves are intended to prioritize near-term flexibility and allow it to continue to invest in future-product development programs during a period of economic uncertainty, as the U.S. and Europe deal with the coronavirus pandemic.
Right now, Ford is facing a sharp drop in revenue that could last for weeks. Ford said on Wednesday that it will shut down all of its manufacturing facilities in North America until at least March 30, to reduce inventories and to deep-clean the facilities in response to worker concerns about the COVID-19 virus.
A day earlier, Ford said that it will down several factories in Europe, for similar reasons.
Ford isn't in danger of running out of cash immediately. Since emerging from the 2009 recession, Ford has sought to maintain a cash reserve of at least $20 billion and at least $10 billion more in available credit lines, funds intended to keep future-product development programs on track through a recession.
Ford reports its cash on hand at the end of every quarter; as of its most recent report, Dec. 31, it had $22.3 billion in cash available and an additional $13.1 billion left on its credit lines.