Summary
This 8-K filing from The Boeing Company (BA) on June 24, 2009, details the Chapter 11 bankruptcy filing of Sea Launch Company, L.L.C. and its affiliates. This event triggered guarantee obligations for Boeing, as a Sea Launch partner, to certain creditors. Boeing's immediate impact is an estimated pre-tax charge of $35 million for the second quarter of 2009. The company intends to fulfill its guarantee obligations and vigorously pursue reimbursement rights from Sea Launch and its other partners, who are obligated to cover Boeing's share based on its 40% ownership.
Key Highlights
- 1Sea Launch Company and its affiliates voluntarily filed for Chapter 11 bankruptcy on June 22, 2009.
- 2Boeing, as a guarantor, faces immediate obligations due to the bankruptcy filing triggering defaults on approximately $448 million in Sea Launch's indebtedness.
- 3Boeing expects to incur a pre-tax charge of approximately $35 million in the second quarter of 2009 related to this event.
- 4Boeing intends to honor its guarantee obligations to Sea Launch's creditors.
- 5Boeing has rights to reimbursement from Sea Launch and its other partners for payments made under the guarantees.
- 6The company will pursue its recovery rights from Sea Launch and its partners, who are obligated to contribute proportionally based on ownership.
- 7Potential additional pre-tax charges for Boeing could reach up to $478 million if reimbursement is not secured from Sea Launch or its partners.
Frequently Asked Questions
Boeing anticipates a pre-tax charge of approximately $35 million in the second quarter of 2009 due to its guarantee obligations related to Sea Launch's Chapter 11 filing.
If Boeing is unable to secure reimbursement from Sea Launch or its other partners for payments made under the credit guarantees or for previously made loans, the company could incur additional pre-tax charges of up to $478 million.
Boeing intends to perform its guarantee obligations and will vigorously pursue its rights to reimbursement from Sea Launch and the other Sea Launch partners. These partners are obligated to reimburse Boeing such that Boeing's contribution does not exceed its 40% ownership share of the aggregate guarantee payments.
Sea Launch is a joint venture involved in the commercial launch of satellites. Boeing is a partner in Sea Launch and provided credit guarantees for its indebtedness. The bankruptcy filing of Sea Launch triggers these guarantees, making Boeing potentially liable for its share of Sea Launch's outstanding debt.