Boeing renewed $10bn of committed bank credit on Friday and accepted something that was not in the old agreements: a promise to keep $5bn of liquidity
Friday at 4.43 in the afternoon is where companies put filings they would rather nobody read closely.
Boeing disclosed after the close that on 24 August it signed a new $3.0bn, 364-day revolving credit agreement with Citibank as administrative agent, JPMorgan as syndication agent, and a syndicate of lenders. It replaces the identical-sized 364-day line that was due to terminate that same day. On its own that is housekeeping, and it happens every August.
The same paragraph does something else.
The covenant that was not there
On 24 August the two five-year agreements underneath were amended as well. The 2024 facility, dated 15 May 2024 and carrying $4.0bn of commitments, was extended by 365 days to 15 May 2030. The 2023 facility, dated 24 August 2023 and carrying $3.0bn, was extended by 365 days to 24 August 2029. Both, in the filing's own list of what the amendments do, had a covenant added requiring Boeing to maintain liquidity of at least $5.0bn as defined in each agreement.
The new 364-day agreement carries the same $5.0bn liquidity floor. So all three of Boeing's committed bank lines, $10.0bn of capacity in total, now sit above a minimum liquidity requirement, and the filing describes that requirement as one of the things the amendments to the older two agreements introduced.
The other financial covenant is unchanged and familiar: consolidated debt may not exceed 60 percent of total capital, both as defined. There are the usual limits on liens and on merging.
What it costs
The pricing is a grid and every rung of it moves with Boeing's credit rating. The commitment fee on undrawn money runs between 0.125 percent and 0.300 percent a year. A SOFR borrowing costs Term SOFR plus between 1.250 percent and 1.700 percent. Anything else costs the highest of Citibank's base rate, the federal funds rate plus 0.50 percent, or one-month Term SOFR plus 1.00 percent, and then between 0.250 percent and 0.700 percent on top.
Boeing does not state its rating in the filing, so the width of those bands is the only thing the document tells you about what a downgrade would cost. The gap between the ends of the drawn grid is 45 basis points.
The exits
The 364-day agreement terminates on 23 August 2027. Boeing may, on payment of additional fees, convert outstanding borrowings into term loans maturing a year after that, and may ask the lenders for a further 364 days.
Six events of default are listed, and they are conventional: five business days to cure a missed payment, 30 days after notice to cure a broken covenant, a materially incorrect representation, a cross-default with other debt in certain circumstances, certain ERISA liabilities, and insolvency. If one occurs and continues, the lenders can accelerate and stop advancing.
The filing was signed by John C. Demers, corporate secretary, and accepted by EDGAR at 4.43 p.m. Eastern on Friday. The three agreements are attached as exhibits.
