8-KMaterial AgreementsFinancial EventsExhibits & Filings

BOEING CO 8-K Report, Material Agreement (Nov 16, 2010)

Filed November 16, 2010For Securities:BABA-PA

Summary

The Boeing Company (BA) has filed an 8-K report detailing the entry into a new $2.376 billion, 364-day revolving credit agreement, effective November 12, 2010. This facility replaces a previous $1.525 billion agreement from the prior year, significantly increasing Boeing's available credit line. The new agreement, led by Citigroup and J.P. Morgan, provides Boeing with enhanced financial flexibility and liquidity, crucial for managing its operations and potential future investments or acquisitions. Key terms include a commitment fee on unused portions and interest rates tied to base rates or Eurodollar rates, with margins influenced by Boeing's credit default swap spread. The agreement also contains standard covenants restricting the company's ability to incur liens, merge, or exceed a 60% consolidated debt-to-capital ratio. This proactive step in securing a larger credit facility suggests a strategic move by Boeing to bolster its financial position and ensure robust access to capital.

Key Highlights

  • 1Boeing entered into a new $2.376 billion, 364-day revolving credit agreement on November 12, 2010.
  • 2This new credit facility significantly increases Boeing's available borrowing capacity, up from $1.525 billion previously.
  • 3The agreement replaces a credit facility that was set to mature in November 2010.
  • 4Citigroup Global Markets Inc. and J.P. Morgan Securities LLC served as joint lead arrangers and joint book managers.
  • 5The credit agreement includes customary covenants related to liens, mergers, and a debt-to-capital ratio limit of 60%.
  • 6Events of default include non-payment, breaches of representations, failure to perform covenants, cross-defaults, ERISA liabilities, and insolvency events.
  • 7Several lenders and their affiliates have pre-existing financial relationships with Boeing, providing various financial services.

Frequently Asked Questions

Boeing entered into the new $2.376 billion credit agreement to increase its financial flexibility and liquidity. Replacing a smaller, expiring facility with a larger one provides greater access to capital for operational needs, strategic opportunities, or unexpected economic conditions.

The agreement is a 364-day revolving credit facility with a principal amount of $2.376 billion. It involves a commitment fee on unused portions and interest rates based on either a base rate (tied to Citibank's base rate, federal funds rate, or LIBOR) plus an applicable margin, or Eurodollar rates plus the market rate spread. The applicable margin is influenced by Boeing's credit default swap spread.

The agreement contains standard covenants that restrict Boeing's ability to incur liens, merge or consolidate with other entities, and maintain consolidated debt above 60% of its total capital. It also outlines events of default, such as failure to pay, breaches of agreements, or insolvency.

No, securing a larger credit facility is typically a proactive financial management strategy. It enhances liquidity and financial flexibility, allowing the company to manage its operations, fund potential investments, or navigate market uncertainties more effectively, rather than signaling distress.