Mellon to buy Ford finance unit for leasing equipment Carmaker continues sales of nonautomotive lines


DEARBORN, Mich. -- Ford Motor Co. said yesterday that it would sell its business-equipment financing unit to Mellon Bank Corp. for about $1.7 billion.

Mellon is acquiring a portfolio of $1.5 billion of leases, and it is paying a $200 million premium, the bank said.

It's the latest step in Ford's effort to sell its nonautomotive finance operations. In May, it sold a rail-car leasing business and 20 percent of its consumer-finance unit, and last month it sold a portfolio of leases to BankAmerica Corp. for $1.8 billion.

"We're really pleased with the progress of the sales and the cash premiums," said Ken Whipple, president of the Ford Financial Services Group.

It previously raised $3.5 billion by selling parts of its USL Capital Corp. subsidiary and USL's portfolios of corporate and municipal bonds, not including the BankAmerica sale, scheduled to close by the end of next month.

That sum also excludes the sale of a portfolio of leases to a partnership Ford and BankAmerica agreed last month to form. Terms of the partnership transaction were not disclosed.

The business-equipment financing unit is also part of San Francisco-based USL. The Dearborn, Mich.-based automaker tTC said in May that it would sell USL Capital in pieces to get the highest value for its assets.

Mellon, based in Pittsburgh, is acquiring a unit that provides financing for leases of data-processing equipment, office furniture and fixtures, and industrial test equipment and machinery. The unit focuses on providing financing for midsized companies.

"This acquisition significantly expands our leasing capabilities on a nationwide basis and complements our existing product line for our middle-market customers, an important industry segment for us," said Jeffrey Leininger, Mellon's vice chairman for specialized lending.

"If the returns are good, this will be a good acquisition, but there's a group of investors who are expecting the bank to buy back more stock," said PaineWebber Inc. analyst Lawrence Coh. "They may be disappointed."

Ford acquired USL Capital, then known as U.S. Leasing, in 1987 for $512 million. USL had assets of $9.7 billion at the end of last year.

Ford said it still is engaged in negotiations to sell USL's remaining business, its real estate financing unit.

Pub Date: 8/07/96

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