Boeing to Draw Down $13.825 Billion Loan

Boeing BA plans to draw down the full amount of a $13.825 billion loan as early as Friday, as the aerospace giant contends with the impact of the coronavirus on worldwide travel, a media report says.
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Boeing  (BA) - Get Report plans to draw down the full amount of a $13.825 billion loan as early as Friday, as the aerospace giant contends with the impact of the coronavirus on worldwide travel, a media report says.

The Chicago aerospace company last month obtained the loan from a group of banks as it works to return the 737 MAX jetliner to service. The 737 MAX was grounded worldwide following two fatal crashes in October 2018 and March 2019. 

Boeing had initially tapped about $7.5 billion of the debt, and is now expected to draw the rest, Bloomberg reported, citing people familiar with the matter. The company plans to draw the rest of the loan as a precaution due to market turmoil.

On another sharply down day on Wall Street, the company's shares posted the biggest drop among members of the Dow Jones Industrial Average. At last check Boeing shares were trading off 12% at $204.27.

Boeing did not immediately respond to a request for comment.

The original loan was $13 billion, but two banks later joined the lender group to bring the total to $13.825 billion, Bloomberg said. The loan documents enable additional commitments for a total obligation of up to $14.5 billion.

In addition to its 737 MAX woes, Boeing is grappling with the spread of the coronavirus. The company has lost revenue in the face of falling demand for planes as passengers cancel flights and airlines pull back orders on new jets.

The two-year loan is structured as a delayed-draw term loan, which enables Boeing to wait to use the money until needed, Bloomberg said. These types of loans are typically expected to be fully accessed.

Separately, Boeing said it took in 18 new orders for wide-body planes in February, but more customers canceled orders of the 737 MAX. 

Boeing said some customers swapped 737 MAX orders in favor of more expensive wide-body planes, Reuters reported.