Boeing enters $10bn credit deal, plans to raise up to $25bn

15th Oct 2024 14:50

(Sharecast News) - Boeing revealed significant steps to strengthen its financial position on Tuesday, as it entered into a $10bn supplemental credit agreement with a consortium of major lenders.

The beleaguered airspace giant said in a regulatory filing that the deal with lenders including BofA Securities, Citibank, Goldman Sachs, and JPMorgan Chase would provide access to short-term liquidity to weather current challenges, particularly a costly strike by its largest labour union, which was impacting already-delayed production and operations.

Under the credit agreement, Boeing said it would pay various fees, including a funding fee of 0.50% on each loan and duration fees ranging from 0.5% to 1%, depending on how long the funds remained outstanding.

Interest rates for borrowings would fluctuate based on Boeing's credit rating, with higher rates applied to loans tied to the secured overnight funding rate (SOFR).

The deal contained customary restrictions and covenants, such as limiting consolidated debt to 60% of Boeing's total capital and restricting certain mergers, liens, and defaults.

In addition to securing the credit line, Boeing also said it was exploring broader financing options.

The company filed plans to raise up to $25bn through debt or equity over the next three years in a move designed to provide greater flexibility in addressing its balance sheet needs.

At 0957 EDT (1457 BST), shares in the Boeing Company were up 0.22% in New York at $149.31.

Reporting by Josh White for Sharecast.com.