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Harley Davidson wants to borrow $ 150 million

Harley Davidson wants to borrow $ 150 million

The company is shuffling funds to maintain liquidity during the pandemic, according to the notice.

Harley Davidson during a pandemic

While the coronavirus pandemic is destroying the motorcycle industry, Harley Davidson is trying hard to stay afloat. In addition to restructuring, management rotation and major changes to production plans, Harley is also making “other actions to provide additional liquidity in response to the challenges of the COVID-19 pandemic”… One of the steps in this process is moving a large amount, paying checking bills, and trying to borrow even more.

Details are described in the Form 8-K document that Harley Davidson submitted to the US Securities and Exchange Commission in early June 2020. Form 8-K is used when public companies are taking large and drastic financial steps in addition to quarterly and annual reports. These additional reports are not uncommon, they are just notification of shareholders about something that was not part of the previously published financial plan. A company releases Form 8-K when it changes management, significantly changes production plans, or unexpectedly spends (or receives) large sums.

Harley Davidson actually did all three of those things (hired a new CEO and changed production plan in May 2020)but specifically this Form 8-K is only concerned with informing shareholders about the movement of funds. Here’s what the company says:

  • In May, the company completed two asset-backed balance sheet securizations, one for $ 500 million and the other for $ 750 million.
  • In May, the company issued EUR 650 million in medium-term bonds with maturity through May 2023. Also paid in May was the 450 million expired medium-term floating rate bonds.
  • The completion of the asset-backed securization transaction resulted in the early termination of the $ 195 million 364-day credit facility, which expired in August 2020, on May 18, 2020. On June 1, 2020, the company opened a new $ 350 million 364-day line of credit with a commitment to take out $ 150 million under the credit line.

It looks like financial gibberish, but the meaning is something like this: Harley borrowed money, paid it back and lent even more, plus they committed themselves to borrow at least 150 million in the next year under the terms of the loan agreement.

Harley Davidson Says These Steps Have Been Taken “in accordance with disclosed liquidity intentions”and that they inform shareholders via Form 8-K “in light of financial market conditions that are challenging for many other issuers”… In other words, not everyone is successful in borrowing now, so Harley Davidson is happy to share positive experiences in this direction.

All this looks like something serious is happening, but do not forget that all modern business revolves not so much around production as around the financial market, and loans and returns are constantly occurring. This is how a lot of money is made. There is no doubt that the coronavirus pandemic hit Harley hard, but it also hit everyone else, and at least this gives hope that shareholders and consumers will understand all the ups and downs within the walls of the company.

Financial games are only part of the new management’s big plan, and the 8-K form filed by the company, although it contains traces of the pressure of circumstances in the form of COVID-19, does not even come close to the results of panic throwing.

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