Bombardier Reports Better than Expected Cash Usage in the Second Quarter and a New $1 billion Senior Secured Credit Facility
MONTREAL, July 22, 2020 (GLOBE NEWSWIRE) — Bombardier (TSX: BBD.B) reported that its second quarter cash usage was approximately $500 million better than previously expected and that it has secured a commitment from investment funds and accounts managed by HPS Investment Partners, LLC to provide a three-year senior secured term loan (the “Facility”) of up to $1.0 billion. Collectively, these actions provide Bombardier with additional liquidly to operate its business through the COVID-19 pandemic as it works to close the previously announced divestures undertaken to reshape Bombardier’s capital structure.As of June 30, 2020, cash on hand and liquidity(1) were approximately $1.7 and $2.4 billion, respectively. With the new Facility, Bombardier expects second quarter 2020 pro-forma liquidity(2) of approximately $3.4 billion, reflecting approximately $1.0 billion of free cash flow usage in the second quarter.(3)The Facility is expected to be in place in the third quarter of 2020 and provides additional liquidity for working capital and general corporate purposes as Bombardier realigns production rates with current market conditions. The Facility will have a minimum utilization of $750 million and a term of three years. Bombardier will have the right to voluntarily prepay the outstanding amount of the Facility. In addition, the sale of Bombardier Transportation will result in a mandatory repayment of 50% of the then outstanding principal amount of the Facility. Drawings under the Facility will bear interest at an agreed margin over the LIBOR reference rate and will be secured by a security interest in certain aviation inventory and related accounts receivable. There are no financial covenants under the Facility.The Facility is subject to the negotiation and execution of a definitive credit agreement and security documents, as well as the satisfaction of other customary closing and drawdown conditions. Once in place, the Facility will be the only corporate credit facility available to the Aviation segment, as certain previous corporate credit facilities were terminated in December 2019, as previously disclosed.Bombardier will provide further details on liquidity and free cash flow usage when it reports its financial results for the second quarter 2020 on August 6, 2020. Bombardier has retained National Bank Financial Inc. and Citigroup Global Markets Inc. as its financial advisors and Norton Rose Fulbright as its lead legal advisor. Latham & Watkins LLP acted as lead legal advisor to HPS Investment Partners, LLC.About Bombardier
With nearly 60,000 employees across two business segments, Bombardier is a global leader in the transportation industry, creating innovative and game-changing planes and trains. Our products and services provide world-class transportation experiences that set new standards in passenger comfort, energy efficiency, reliability and safety.Headquartered in Montréal, Canada, Bombardier has production and engineering sites in over 25 countries across the segments of Aviation and Transportation. Bombardier shares are traded on the Toronto Stock Exchange (BBD). In the fiscal year ended December 31, 2019, Bombardier posted revenues of $15.8 billion. News and information are available at bombardier.com or follow us on Twitter @Bombardier.Bombardier is a trademark of Bombardier Inc. and its subsidiaries. (1) Liquidity is defined as cash and cash equivalents of approximately $1.7 billion plus the undrawn amount under Transportation’s €1,154 million unsecured revolving credit facility of approximately $700 million.
(2) Pro-forma liquidity is defined as liquidity as of June 30, 2020 plus the new Facility.
(3) Non-GAAP financial measure. Defined as cash flows from operating activities less net additions to PP&E and intangible assets. During the second quarter of 2020 cash flows from operating activities was a usage of approximately $960 million and net additions to PP&E and intangibles assets was approximately $80 million.FORWARD-LOOKING STATEMENTSThis press release includes forward-looking statements, which may involve, but are not limited to: statements with respect to our objectives, anticipations and outlook or guidance in respect of various financial and global metrics and sources of contribution thereto, targets, goals, priorities, market and strategies, financial position, plans, expectations, anticipations, estimates and intentions, general economic and business outlook, strength of capital profile and balance sheet, creditworthiness, available liquidities and capital resources and expected financial requirements and restructuring initiatives, expectations and objectives regarding debt repayments, and the impact of the COVID-19 pandemic on the foregoing and the effectiveness of plans and measures we have implemented in response thereto. As it relates to previously announced pending transactions, including the divestiture of our operations in Belfast and Morocco, and the sale of the Transportation division to Alstom (collectively, the “Pending Transactions”), this press release also contains forward-looking statements with respect to the expected completion thereof in accordance with their terms and conditions; the respective anticipated proceeds and use thereof, as well as the anticipated benefits of such transactions and their expected impact on our outlook, guidance and targets, operations, infrastructure, opportunities, financial condition, business plan and overall strategy.Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may”, “will”, “shall”, “can”, “expect”, “estimate”, “intend”, “anticipate”, “plan”, “foresee”, “believe”, “continue”, “maintain” or “align”, the negative of these terms, variations of them or similar terminology. Forward-looking statements are presented for the purpose of assisting investors and others in understanding certain key elements of our current objectives, strategic priorities, expectations, outlook and plans, and in obtaining a better understanding of our business and anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes.By their nature, forward-looking statements require management to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecast results set forth in forward-looking statements. While management considers these assumptions to be reasonable and appropriate based on information currently available, there is risk that they may not be accurate. The assumptions are set out throughout this press release (particularly, in the assumptions below the Forward-looking statements in the MD&A of our financial report for the quarter ended March 31, 2020). For additional information, including with respect to other assumptions underlying the forward-looking statements made in the press release, refer to the Strategic Priorities and Guidance and forward-looking statements sections in the applicable reportable segment in the MD&A of our financial report for the fiscal year ended December 31, 2019. Given the impact of the changing circumstances surrounding the COVID-19 pandemic and the related response from the Corporation, governments (federal, provincial and municipal), regulatory authorities, businesses and customers, there is inherently more uncertainty associated with the Corporation’s assumptions as compared to prior periods.Certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, risks associated with general economic conditions, risks associated with our business environment (such as risks associated with “Brexit”, the financial condition of the airline industry, business aircraft customers, and the rail industry; trade policy; increased competition; political instability and force majeure events or global climate change), operational risks (such as risks related to developing new products and services; development of new business and awarding of new contracts; book-to-bill ratio and order backlog; the certification and homologation of products and services; fixed-price and fixed-term commitments and production and project execution, including challenges associated with certain Transportation projects; pressures on cash flows and capital expenditures based on project-cycle fluctuations and seasonality; execution of our strategy, transformation plan, productivity enhancements, operational efficiencies and restructuring initiatives; doing business with partners; inadequacy of cash planning and management and project funding; product performance warranty and casualty claim losses; regulatory and legal proceedings; environmental, health and safety risks; dependence on certain customers, contracts and suppliers; supply chain risks; human resources; reliance on information systems; reliance on and protection of intellectual property rights; reputation risks; risk management; tax matters; and adequacy of insurance coverage), financing risks (such as risks related to liquidity and access to capital markets; retirement benefit plan risk; exposure to credit risk; substantial debt and interest payment requirements; restrictive debt covenants and minimum cash levels; financing support for the benefit of certain customers; and reliance on government support), market risks (such as foreign currency fluctuations; changing interest rates; decreases in residual values; increases in commodity prices; and inflation rate fluctuations). For more details, see the Risks and uncertainties sections in Other in the MD&A of our financial report for the quarter ended March 31, 2020 and in the MD&A of our financial report for the fiscal year ended December 31, 2019. Any one or more of the foregoing factors may be exacerbated by the growing COVID-19 outbreak and may have a significantly more severe impact on the Corporation’s business, results of operations and financial condition than in the absence of such outbreak. As a result of the current COVID-19 pandemic, additional factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to: risks related to the impact and effects of the COVID-19 pandemic on economic conditions and financial markets and the resulting impact on our business, operations, capital resources, liquidity, financial condition, margins, prospects and results; uncertainty regarding the magnitude and length of economic disruption as a result of the COVID-19 outbreak and the resulting effects on the demand environment for our products and services; emergency measures and restrictions imposed by public health authorities or governments, fiscal and monetary policy responses by governments and financial institutions; disruptions to global supply chain, customers, workforce, counterparties and third-party service providers; further disruptions to operations, production, project execution and deliveries; technology, privacy, cybersecurity and reputational risks; and other unforeseen adverse events.With respect to the Pending Transactions, certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to: the failure to satisfy closing conditions, including regulatory approvals, or delay in completing such transactions and, as regards the sale of the Transportation division, the failure to enter into definitive documentation or the failure to receive Alstom shareholder approval in respect of the required capital increase or to complete relevant works council consultations, or the occurrence of a material adverse change; alternate sources of funding to replace the anticipated proceeds from the Pending Transactions may not be available when needed, or on desirable terms; the occurrence of an event which would allow the parties to terminate their obligations or agreements in principle; changes in the terms of the transactions; the failure by the parties to fulfill their obligations and agreements in principle; risks associated with the loss and replacement of key management and personnel; and the impact of the transactions on our relationships with third parties, including potentially resulting in the loss of clients, employees, suppliers, business partners or other benefits and goodwill of the business.Readers are cautioned that the foregoing list of factors that may affect future growth, results and performance is not exhaustive and undue reliance should not be placed on forward-looking statements. For more details, see the Risks and uncertainties sections in Other in the MD&A of our financial report for the quarter ended March 31, 2020 and in the MD&A of our financial report for the fiscal year ended December 31, 2019. Other risks and uncertainties not presently known to us or that we presently believe are not material could also cause actual results or events to differ materially from those expressed or implied in our forward-looking statements. The forward-looking statements set forth herein reflect management’s expectations as at the date of this press release and are subject to change after such date. Unless otherwise required by applicable securities laws, we expressly disclaim any intention, and assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.