Bombardier secures up to $1 billion in credit, points to improved cash usage

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The Canadian jet maker has already pulled its 2020 forecast and announced job cuts as the health crisis pummels demand for its high-margin private jets.

The company said it secured a commitment from investment funds and accounts managed by HPS Investment Partners LLC to provide the three-year senior secured term loan.

The loan will provide additional liquidity for working capital as Bombardier realigns its production rates with current market conditions, the company said.

In the second quarter, Bombardier expects pro-forma liquidity of about $3.4 billion, and about $1 billion of free cash flow usage. The company will report its second-quarter results on Aug. 6.

As of June 30, Bombardier said it had about $1.7 billion cash on hand and $2.4 billion in liquidity.

The Canadian company is in the midst of selling its rail business to train maker Alstom (PA:ALSO), which expects to secure European Union’s approval by the end of the month.

The sale of Bombardier’s transportation business will result in a mandatory 50% repayment of outstanding principal towards the $1-billion loan.