April 8, 2020 / 7:15 AM / 2 months ago

BAE Systems to raise $1.3 billion in debt to fund pension deficit

FILE PHOTO: Trade visitors walk past an advertisement for BAE Systems at Farnborough International Airshow in Farnborough, Britain, July 17, 2018. REUTERS/Toby Melville/File Photo

(Reuters) - Britain’s BAE Systems (BAES.L) is looking to raise $1.3 billion in debt to fund its pension deficit and repay related loans, the company said on Wednesday, as it prepares to deal with the fallout of the coronavirus outbreak.

The company had said in February it will pay off 1 billion pound ($1.23 billion) by raising debt in the coming months. Its pension deficit was 1.9 billion pounds at the end of October last year.

The maker of Typhoon fighters, combat vehicles and Astute Class nuclear-powered attack submarines said the bonds will be issued at a coupon rate of 3.4% and will mature in April 2030.

The company had last week decided to defer a decision on dividend payout and launched cost cuts after seeing significant disruption from coronavirus in recent weeks.

It also said it had significant cash and access to a 2 billion pound line of credit until April 2024.

Reporting by Yadarisa Shabong in Bengaluru; Editing by Bernard Orr and Arun Koyyur

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