July 22, 2020 / 1:31 PM / 21 days ago

UPDATE 2-Bombardier secures up to $1 bln in credit, cites improved cash usage, shares rise

(Adds context, stock price, analyst comment)

July 22 (Reuters) - Bombardier Inc said on Wednesday it had secured a loan of up to $1 billion and used $500 million less cash in the second quarter than estimated, signaling it would have enough liquidity to weather the COVID-19 pandemic.

Bombardier shares rose 6% in morning trade.

The Canadian corporate aircraft and train maker has pulled its 2020 forecast and announced job cuts as the health crisis pummels demand for high-margin private jets.

The company said it secured a commitment from investment funds and accounts managed by HPS Investment Partners LLC to provide the three-year senior secured term loan.

The loan will provide additional liquidity for working capital as Bombardier realigns its production rates with current market conditions, the company said.

Industry-wide deliveries of corporate jets are forecast to fall this year by at least a third as the coronavirus pandemic kept communities in lockdown and businesses shut, disrupting global travel and slowing economic activity.

In the second quarter, Bombardier expects pro-forma liquidity of about $3.4 billion, and about $1 billion of free cash flow usage. The company will report its second-quarter results on Aug. 6.

As of June 30, Bombardier said it had about $1.7 billion cash on hand and $2.4 billion in liquidity.

In a note to clients, Desjardins analyst Benoit Porier said he was "pleased with the better-than-expected" cash usage and facility.

Bombardier said in May it expects free cash to start to break even or turn positive during the second half of 2020.

The Canadian company is in the midst of selling its rail business to train maker Alstom, which expects to secure European Union approval by the end of the month.

U.S. portfolio manager HPS had $62 billion of assets under management as of July. (Reporting by Sanjana Shivdas in Bengaluru and Allison Lampert in Montreal; Editing by Aditya Soni, Shinjini Ganguli and Jonathan Oatis)

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