Summary
Garmin Ltd. (GRMN) filed an 8-K on March 14, 2013, to disclose a material definitive agreement. Garmin International, Inc., a subsidiary, entered into a Memorandum of Agreement with Bombardier, Inc. This agreement involves a short-term, interest-free loan of $173.7 million from Garmin to Bombardier. The loan is intended to assist Bombardier with cash flow delays related to the avionics certification for the Lear 70 and Lear 75 aircraft programs. The loan will be disbursed in seven installments between March 22, 2013, and September 20, 2013. Repayment by Bombardier is conditional upon Garmin returning a flight test vehicle and delivering specific software and hardware by July 11, 2013. Repayment will occur in five installments starting November 1, 2013, with potential extensions tied to the July 11th milestone.
Key Highlights
- 1Garmin International, Inc. (a subsidiary of Garmin Ltd.) entered into a material definitive agreement with Bombardier, Inc. on March 14, 2013.
- 2The agreement includes a short-term, interest-free loan from Garmin to Bombardier totaling $173.7 million.
- 3The loan is to help Bombardier manage cash flow issues impacting the Lear 70 and Lear 75 aircraft programs.
- 4Loan disbursement will be made in seven installments from March 22, 2013, to September 20, 2013.
- 5Bombardier's repayment of the loan is contingent on Garmin meeting specific delivery milestones by July 11, 2013.
- 6Loan repayment by Bombardier is structured in five installments, commencing November 1, 2013, and ending March 7, 2014.
- 7Repayment dates are subject to extension if Garmin misses the July 11, 2013, milestone.