April 23, 2020 / 6:59 PM / a month ago

Safran secures €3bn of additional liquidity

LONDON, April 23 (LPC) - French aviation, space and defence technology firm Safran has raised a €3bn term loan from 12 banks in the wake of the coronavirus pandemic.

Safran announced at the end of March it was lining up a €3bn facility to boost its liquidty.

The loan will be used for general corporate purposes and for additional liquidty and is the latest example of how Europe’s loan market remains open for high quality issuers.

Lenders lined up to support Safran — which raised significantly more than the €3bn it was looking for — within a short two-week timeframe.

“The loan was significantly oversubscribed,” a senior banker said.

BNP Paribas led the deal alongside 11 existing relationship banks.

Mandated lead arrangers are Santander, Bank of America, Credit Agricole, Deutsche Bank, HSBC, MUFG, Natixis and Societe Generale.

CIC, Standard Chartered and SMBC were lead arrangers.

The loan has a two-year maturity and was structured as a 12 +6 +6, which is typical of how liquidity facilities are being arranged in this Covid-19 climate, to reflect the fact they are short term liquidity lines.

The loan is available for 12 months and Safran will pay an extension fee if it wants to extend the facility for additional six month periods.

“It is more economical for the client to do it this way,” the senior banker said.

The facility is in addition to Safran’s existing undrawn €2.52bn RCF, which is due to mature in December 2022.

To date, cash and cash equivalents total €3.1bn, of which €2.8bn are available immediately or within 90 days, the company said.

Safran has a commercial paper programme of €1.8bn and €419m maturing at the end of April to mid-May 2020.

It also has two bonds maturing in July 2020 comprising €500m floating rate bond and a €99m fixed rate bond.

Safran has reacted to the virus crisis by ramping up measures taken since December 2019 in response to Boeing’s decision to shut down the Boeing 737 MAX assembly line.

The company has paused its capital expenditure, defined new research and development objectives and reduced direct and indirect costs. (Editing by Christopher Mangham)

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