Why did Boeing secure a new $13.0 billion credit facility?

Boeing secured this credit facility to enhance its liquidity and financial flexibility. In the context of early 2020, this provided a crucial financial buffer to manage operational needs, potential unforeseen expenses, and to support strategic objectives, especially amidst ongoing challenges with the 737 MAX program and a dynamic market environment.

What are the key terms of this new loan agreement?

The agreement is a $13.0 billion delayed draw term loan with a two-year term. Commitments expire in August 2021, and the loan matures in February 2022. Interest rates vary based on Boeing's credit rating, with options for base rate or Eurodollar rate borrowings. It also includes standard covenants such as debt-to-capital ratios and limitations on mergers, along with typical events of default.

Who are the main financial institutions involved in this credit agreement?

The credit agreement involves a syndicate of lenders, with Citibank, N.A. serving as the administrative agent. Citibank, JPMorgan Chase Bank, N.A., BofA Securities, Inc., and Wells Fargo Securities, LLC acted as joint lead arrangers and joint book managers.

Does this credit facility represent new debt for Boeing?

Yes, this credit facility represents a potential new source of debt financing. However, it is a 'delayed draw' facility, meaning Boeing can borrow funds as needed up to the $13.0 billion limit. This allows the company to manage its borrowing efficiently and access capital when required, rather than taking the full amount at once.

BA/BA-PA 8-K: Material Agreements & Financial Events

Summary

The Boeing Company (BA) announced on February 7, 2020, that it entered into a significant $13.0 billion, two-year delayed draw term loan credit agreement on February 6, 2020. This facility, arranged by major financial institutions including Citibank, JPMorgan Chase Bank, and Bank of America, provides Boeing with substantial liquidity to support its operations and strategic initiatives. The agreement allows for borrowings that can be drawn over time, with commitments terminating in August 2021 and a final maturity in February 2022. This financing provides a crucial financial cushion, especially considering the challenging market conditions and the ongoing issues with the 737 MAX program at the time. The terms of the agreement include standard covenants related to debt levels and mergers, as well as typical events of default. Investors should note that this credit facility offers Boeing flexibility to access capital as needed, underscoring the company's proactive approach to financial management.

Key Highlights

1Boeing entered into a $13.0 billion, two-year delayed draw term loan credit agreement on February 6, 2020.
2The credit facility provides Boeing with significant liquidity and financial flexibility.
3Major financial institutions, including Citibank, JPMorgan Chase, and Bank of America, are involved as arrangers and lenders.
4The commitments under the agreement are scheduled to terminate no later than August 6, 2021.
5The final maturity date for this term loan is February 6, 2022.
6The agreement includes customary covenants restricting consolidated debt to 60% of total capital and limitations on mergers.
7Events of default are clearly defined, including failure to pay, material misrepresentations, and cross-default provisions.

BOEING CO 8-K Report, Material Agreement (Feb 7, 2020)

Summary

Key Highlights

Frequently Asked Questions