(By Mayur Pahilajani - iStockAnalyst Writer)

Dearborn, MI - Automakers scramble to raise capital as the lawmakers continue to delay the decision on the potential bailout of the industry.

Cash-strapped Ford Motor Co. (NYSE: F), following the steps of General Motors Corp. (NYSE: GM), announced Tuesday that it plans to raise as much as $540 million by selling 20 percent stake in Japan's Mazda Motor Corp.

“This agreement allows Ford to raise capital that will help fund our product-led transformation, and at the same time, allows Ford and Mazda to continue our successful strategic relationship in the best interest of both companies,” Ford President and CEO Alan Mulally said in a statement on Tuesday.

Under the latest measure, Ford will reduce its ownership in the Hiroshima-based Mazda to 13 percent from 33.4 percent. Mazda along with a group of Mazda’s strategic business partners are going to purchase the stakes.

Mazda confirmed on Tuesday that it would spend up to 17.9 billion yen ($185.3 million) to purchase back up to 6.87 percent of its own stock from the total shares in a Wednesday morning off-hours trading. The two companies will continue their strategic relationship that spans nearly 30 years.

“The sale of Mazda shares by our partner, Ford, will not result in any change in Mazda’s strategic direction and we will continue to accelerate our product-led brand improvement and cost innovation initiatives,” Mazda Chairman, President and CEO Hisakazu Imaki said in the statement.  “We will continue our strategic relationship through our ongoing joint ventures with Ford, as well as the sharing of platforms and powertrains.”

The Dearborn, Michigan-based automaker sales have dropped by as much as 28 percent in the month of October on weak consumer spending, and reported $3 billion loss in the third quarter. GM reported a net loss of $2.5 billion or $4.45 per share for the third quarter. GM has also posted around $80 billion in losses since 2005, including $20 billion so far this year.

General Motors yesterday announced that it will sell its entire 3 percent stake in the Japanese automaker, Suzuki Motor Corp., to raise capital amid deteriorating cash reserves. The Detroit, Michigan-based automaker is expected to raise 22.4 billion yen ($230 million) by selling its complete stake in Suzuki Motor. Deutsche Bank AG analyst Rod Lache recently downgraded price per share on the company from $4 per share to $0 and set a negative outlook on the automaker's earnings.

The Detroit’s Big Three companies including Chrysler LLC is seeking a $25 billion package of loans to help the troubled sector. The head of three companies including Ford's Chief Executive Officer Alan Mulally, GM's Richard Wagoner and Chrysler's Robert Nardelli are scheduled to testify on Tuesday at a Senate Banking Committee hearing to justify the loan they have been seeking to avert bankruptcy.

Shares of the company were moving higher by $0.02 or 1.16 percent to $1.74 in New York Stock Exchange composite trading on Tuesday. The stock of the automaker has plunged by more than 74 percent so far this year. The company hit a low of $1.72 and a high of $8.79 in the last 52 weeks.

Source: http://media.ford.com/article_display.cfm?article_id=29437