Boeing Quickly Taps More Than Half of New $13.8 Billion Loan
(Bloomberg) -- Boeing Co. has tapped $7.5 billion of a new loan that the U.S. plane maker arranged with banks earlier this month to give it more financial flexibility to weather the fallout from the 737 Max crisis, according to people familiar with the matter.
The loan was boosted to $13.825 billion after two more banks joined its lender group, said the people, who asked not to be named discussing a private transaction. Boeing had set the size of the loan at $13 billion earlier this month, an amount that grew from a planned $10 billion. The company at one point received commitments for $14 billion.
After the deal wrapped up, the total number of lenders rose to 20 after Bank of China Ltd. committed $500 million and PNC Financial Services Group Inc. pledged $325 million, the people said.
The two-year loan is structured as a delayed-draw term loan, allowing Boeing the flexibility to wait to use the money until needed. Such loans are typically expected to be accessed. Boeing’s new loan will give it more breathing space as the crisis takes a toll on the company’s finances and once-solid credit rating.
A representative for Citigroup Inc., which led the loan, declined to comment. A representative for Boeing did not immediately respond to a request for comment.
Boeing now faces a cash burn in the billions of dollars as it deals with lost revenue and supporting both suppliers and airline customers during the disruption.
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