Caterpillar needs more money to stay afloat

Caterpillar needs more money to stay afloat

Like many others, Caterpillar finds itself in search for stimulus. As the economy grinds to a halt, the construction sector is hit hard, Caterpillar in dire need of money to stay afloat.

Caterpillar is in talks with different banks to raise a new credit facility worth $3 billion. The new loan comes as an extension of the already existing one agreed upon on Monday as a $2 billion bond package. A total of $5 billion in credit expected to boost the company's liquidity. Among the banks involved in the process, we see JP Morgan Chase & Co., Societe Generale SA, and Bank of America Corp.

To keep the company afloat, Jim Umpleby, the CEO, said in a letter published last week that in 2020 senior executives, management, and some salaried workers will have their base-pay put on hold. Moreover, top executives won't receive the annual incentive payouts. And the employees from East Peoria were laid off due to weak demand. These measures come as a way to cut costs during the pandemic.

According to Bloomberg.com, Caterpillar has a $3.15 billion revolving credit facility maturing in September, a $2.73 billion one which will develop in 2022, and a $4.62 billion due in 2024.

During the Thursday trading session, the stock price fell 1.86% to close at $125.03, being the third-worst performer in USA30.

The CEO is confident that everything will pass, and things will get back to normal: "We have faced and overcome many challenges during our 95-year history. Working together, I am confident we will emerge even stronger after the impact of the pandemic subsides."

Overall, in the US, companies have gathered up new loans worth $50 billion.


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Sources: Bloomberg.com, thestreet.com.

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The information presented herein is prepared by CAPEX.com and does not intend to constitute Investment Advice. The information herein is provided as a general marketing communication for information purposes only and as such it has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Users/readers should not rely solely on the information presented herewith and should do their own research/analysis by also reading the actual underlying research. The content herewith is generic and does not take into consideration individual personal circumstances, investment experience or current financial situation.

Therefore, Key Way Investments Ltd shall not accept any responsibility for any losses of traders due to the use and the content of the information presented herein. Past performance is not a reliable indicator of future results.