Direct lender HPS provides Bombardier with $1 billion line of credit

Bomber Inc.

secured a $1 billion credit facility from direct lending firm HPS Investment Partners LLC as the Canadian train and aircraft maker waits to complete the sale of its train manufacturing business.

The loan helps the Montreal-based company fill a potential funding gap as it seeks regulatory approvals for the sale of its rail unit to Alstom HER

of France, a transaction that could bring up to 4.5 billion dollars to Bombardier.

The sale of the company, which makes high-speed trains and New York City subway cars, was announced in February but will not be finalized until the first half of 2021, according to documents filed by Bombardier.

After the sale, Bombardier will focus primarily on the production of business jets.

More from WSJ Pro Bankruptcy

The HPS loan lifted Bombardier’s bonds on Monday. The company’s notes due in 2022 are up nearly 4 cents to more than 89 cents on the dollar from the last trade Monday of just over 85 cents, according to MarketAxess. Bombardier shares rose 7.5% to 36 cents.

Non-bank investment firms such as HPS have played a larger role in lending to cash-strapped businesses during the coronavirus pandemic. HPS granted a $420 million line of credit to teledentistry company SmileDirectClub Inc.

in May, while peers Silver Lake Group LLC and Sixth Street Partners provided $1 billion in new capital to Airbnb Inc. in exchange for debt and equity in the vacation rental business.

Bombardier has sold non-core businesses with the aim of using the proceeds to alleviate its $9.3 billion in debt since before the pandemic hampered air travel.

The sale to Alstom still requires the support of the French company’s shareholders as well as antitrust approval.

In April, Moody’s Investors Service said Bombardier faced “uncertainty regarding the closing of the sale due to weakening market conditions following the announced sale and a lengthy anticipated antitrust process.”

Earlier this year, Moody’s, Fitch Ratings and S&P Global Ratings all downgraded Bombardier given the pandemic’s impact on demand for the company’s planes and trains.

Bombardier is required to repay half of the amount outstanding under the HPS loan once the sale of the transportation business is complete and the proceeds are collected.

The company faces nearly $1.5 billion in debt maturities in 2021. On Wednesday, the company said it has access to $2.4 billion in cash.

Write to Soma Biswas at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8