Summary
The Boeing Company (BA) announced on February 22, 2005, that it entered into an Asset Purchase Agreement to sell substantially all of the assets related to its Commercial Airplanes operating segment's airplane components business. This business, primarily located in Wichita, Kansas, and Tulsa and McAlester, Oklahoma, designs, manufactures, and supports structural components for commercial airplanes and certain military platforms. The sale to Mid-Western Aircraft Systems, Inc. is valued at approximately $900 million in cash, subject to certain post-closing adjustments. The transaction also includes the transfer of certain liabilities to Mid-Western, long-term supply agreements expected to provide cost savings for Boeing, and a $150 million subordinated line of credit from Boeing to Mid-Western. Boeing will retain certain liabilities and anticipates recognizing a non-cash loss related to pension assets and liabilities, which is expected to reduce future pension expenses.
Key Highlights
- 1Boeing is selling its Commercial Airplanes operating segment's airplane components business for approximately $900 million in cash.
- 2The sale includes assets located in Wichita, Kansas, and Tulsa and McAlester, Oklahoma.
- 3The transaction involves long-term supply agreements with the buyer, Mid-Western Aircraft Systems, Inc., expected to generate cost savings for Boeing.
- 4Boeing will provide Mid-Western with a $150 million subordinated line of credit.
- 5Boeing anticipates a non-cash loss on the transaction due to the transfer of pension-related assets and liabilities, which is expected to lower future pension expenses.
- 6The completion of the sale is contingent upon several conditions, including governmental and third-party consents, Mid-Western securing its debt financing, and the negotiation of collective bargaining agreements.