Ford plans to reduce the cost of servicing its massive debt by buying back some bonds and swapping others for shares.

It is offering to spend up to US$2.2bn to retire up to $10.4bn in debt, spokesman Mark Truby told Agence France-Presse (AFP). The automaker currently has about $25bn in outstanding debt.

“The debt restructuring plan we are announcing today is a critical step in Ford’s overall transformation,” Ford president and CEO Alan Mulally said in a statement.

“We are continuing to work with all of our stakeholders – including employees, dealers and suppliers – to secure Ford’s future in this difficult economic environment.”

Ford is the only one of the Detroit based ‘big three’ not to ask for government bailout loan help though some analysts insist it will eventually have to ask for help. Mulally insisted again this week at an economics event in California that the company will manage on its own.

Meawhile, financial arm Ford Motor Credit will spend up to $1.8bn buying back Ford’s bonds at between 30% and 50% of their face value, Truby told AFP.

Ford will spend up to $400m on cash premiums to persuade bond holders to convert up to $4.88bn dollars in debt for shares of Ford’s common stock, the report said.

It also recently agreed tentatively with the UAW union to meet about half its $13.2bn obligation to a ‘VEBA’ healthcare fund with shares instead of cash.