Boeing to withdraw its entire $ 13.8 billion loan
NEW YORK, March 11 (LPC) – Boeing Co plans to borrow the balance of its latest loan as the aircraft maker wins time to return to profitability, sources told Refinitiv LPC.
The original loan was $ 13.825 billion. Boeing has eighteen months to finance the deferred drawing.
“They planned to withdraw the entire amount over time,” said a source close to the funding.
The loans that were signed in February were intended to provide the company with access to short-term liquidity, as the carrier’s financial pressures increased following the shutdown of production of its 737 MAX aircraft.
Boeing has planned to borrow the full financing, which is in the form of a deferred drawing term loan, as it negotiated the deal in December.
The company has already borrowed $ 7.5 billion from the new loan in February. The remaining part could be borrowed as early as Friday, sources said.
“They were expected to fund the installation,” a second source said. “Otherwise, they would have made a revolving credit. “
Deferred drawing loans differ from revolving credits in that they cannot be borrowed. Unlike revolvers, which like credit cards offer a revolving line of credit, deferred drawing term loans are time-based.
Boeing informed its suppliers on January 21 that the “unearthing of the 737 MAX will begin in mid-2020”.
In January, the company took to its banks to raise at least $ 10 billion in loans as it sought to consolidate its balance sheet before profits to reassure investors that it had access sufficient for short-term liquidity. The loans were then increased to $ 13.825 billion.
The move came as financial pressures mounted for the manufacturer following the shutdown of production of its 737 MAX aircraft.
The deferred drawing term loan matures in two years, Refinitiv LPC previously reported. Boeing will then have to reimburse it.
Citi led the new trade, which opens at 100bp on Libor. JP Morgan, Wells Fargo, and Bank of America have also signed on as prospects.
Boeing and Citi declined to comment.
Additional reporting by Daniela Guzman. (Reporting by Michelle Sierra Editing by Aaron Weinman and Kristen Haunss)