(Reuters) – Bombardier Inc. BBDb.TO said Wednesday it had secured a loan of up to $ 1 billion and used $ 500 million less than estimated cash in the second quarter, signaling that it would have enough cash to meet the COVID-19 Surviving the pandemic.
Bombardier stock rose 6% in morning trading.
The Canadian manufacturer of corporate aircraft and trains has withdrawn its 2020 forecast and announced job cuts as the health crisis squeezes demand for high-margin private jets.
The company said it has secured a commitment from mutual funds and accounts managed by HPS Investment Partners LLC to provide the three-year senior secured loan.
The loan will provide additional liquidity for working capital as Bombardier adjusts its production rates to reflect current market conditions, the company said.
Industry-wide corporate jet deliveries are expected to decline by at least a third this year as the coronavirus pandemic locked communities and businesses closed, disrupted global travel and slowed economic activity.
In the second quarter, Bombardier expects pro forma liquidity of approximately $ 3.4 billion and free cash flow of approximately $ 1 billion. The company will publish its second quarter results on August 6th.
As of June 30, Bombardier said it had approximately $ 1.7 billion in cash and $ 2.4 billion in liquidity.
In a statement to customers, Desjardins analyst Benoit Porier said he was “satisfied with the better than expected” cash use and configuration.
Bombardier said in May that it expects free cash to break even or go positive in the second half of 2020.
The Canadian company sells its rail business to the rail manufacturer Alstom ALSO PAexpected to be approved by the European Union by the end of the month.
The US portfolio manager HPS had assets under management of 62 billion US dollars in July.
Reporting by Sanjana Shivdas in Bengaluru and Allison Lampert in Montreal; Editing by Aditya Soni, Shinjini Ganguli and Jonathan Oatis
