Navistar Repays $200 Million In Convertible Notes

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PR Newswire  /  October 15, 2018

Navistar International Corporation announced that the truckmaker has repaid in full its 4.5% Senior Subordinated Convertible Notes issued in October 2013. 

The repayment of the outstanding principal of $200 million at maturity on October 15, 2018, was funded with cash on hand.

"This repayment is another important step for Navistar, as it reflects our stronger liquidity position, building on the Company's return to profitability in 2017 and its expected generation of positive free cash flow in 2018," said Walter Borst, chief financial officer. "Our improved financial profile provides Navistar with additional flexibility as we work to improve our balance sheet and credit ratings."

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Navistar: Securities Repayment Heightens Truck Maker’s Financial Profile

Heavy Duty Trucking (HDT)  /  October 15, 2018

Navistar International Corporation (NYSE: NAV) has repaid in full the 4.5% senior subordinated convertible notes that it issued in October 2013. The manufacturer of International-brand trucks and engines stated that the repayment of the outstanding principal of $200 million at maturity on Oct.15, 2018 was funded with cash on hand. 

A convertible note is a form of short-term debt that converts into equity, typically in conjunction with a future financing round, according to one definition.

"This repayment is another important step for Navistar, as it reflects our stronger liquidity position, building on the company's return to profitability in 2017 and its expected generation of positive free cash flow in 2018," said Walter Borst, Navistar CFO. "Our improved financial profile provides Navistar with additional flexibility as we work to improve our balance sheet and credit ratings."

Three weeks ago, at the IAA Commercial Vehicles show in Hannover, Germany, Navistar CEO Troy Clarke noted the benefits of the company’s two-year-old “strategic alliance” with Germany-based Traton Group, formerly known as Volkswagen Truck and Bus.

Traton purchased a 17% equity stake in Navistar in 2016 and agreed to share technological developments and pursue global sourcing opportunities as partners. Navistar has already made a deal to use a new powertrain developed by Traton in future trucks, starting in 2021.

The partnership agreement has been credited with helping Navistar turn around its financial outlook in recent years, with both companies expecting to save hundreds of millions of dollars in the next five years.