Harley-Davidson Gets $350 Million 364-Day Credit Facility to Bolster Liquidity
To Cope With Challenges
Harley-Davidson is a massive company and a lot of its assets are tied up. This means there might not be as much liquidity as the business would always like to have. To combat this issue, Harley recently took steps to get $350 million 364-day credit facility, according to an 8-K filing with the Securities and Exchange Commission.
Auto Finance News reported on this fact. I first noticed the headline from Visordown, but that story is no longer accessible for some reason. That story listed the $350 million credit as a “survival loan,” which isn’t really accurate, so I suspect the article had a few issues and was pulled.
According to the report from Auto Finance News, Harley has committed to drawing $150 million on the new line of credit. This means Harley will be able to use that $150 million to do what it needs to in its business. A line of credit like this is a revolving credit that runs 364 days. After that one year cutoff, banks must reserve capital against unused amounts under revolving credits, according to MoneyWords.
It’s not a huge surprise to see Harley using some credit. The business generates tons of revenue, but it has suffered losses for many months. Also, much of the company’s money is tied up in assets, and that means it can use this credit to operate the business as it needs.
This does perhaps indicate a cash-flow issue for Harley, which is not a good sign. There are many people who see Harley’s tough spot as the end of the road, but I think Harley still has a lot of life left in it. The business needs to do a lot of work, and this recent development doesn’t instill much confidence.