Boeing intends to issue debt to fund Embraer purchase

Boeing to issue debt to acquire Embraer by the end of the year as it tries to maintain strong balance sheet while losses from 737 Max continue to rise

Source: Flight Global

Boeing intends to issue debt to fund the majority of its planned $4.2 billion acquisition of Embraer’s commercial division, a deal the companies hope will close by the end of the year.

The Chicago-based airframer issued a preliminary securities document on 29 July announcing its intention to issue the debt, though the document does not specify debt amounts.

However, Boeing tells FlightGlobal it intends “to use approximately $4 billion of the net proceeds from this offering to fund our previously announced joint venture with Embraer that we expect to close in the fourth quarter of 2019”.

“We intend to use the remaining net proceeds for general corporate purposes,” Boeing says.

Boeing’s deal with Embraer call for it to acquire 80% of Embraer’s commercial aircraft division, which includes the popular E-Jet line of regional jets, for $4.2 billion.

Boeing lost $2.9 billion in the second quarter after recording a $5.6 billion charge related to the expected financial fallout from delayed deliveries of 737 Max to customers.

“We remain committed to maintaining a strong balance sheet while executing a balanced cash deployment strategy,” Boeing says of its intention to issue more debt. “The debt issuance supports meeting these objectives and provides adequate financial flexibility to address financial market uncertainty, emerging business needs, as well as take advantage of potential strategic business opportunities should they arise.”