Chemours borrows $300M as coronavirus precaution
WILMINGTON – The Chemours Co. reported late March 3 that it was borrowing $300 million from its revolving credit fund as a precaution in a market rocked by the coronavirus outbreak.
The funds from the company’s previously untapped $800 million revolving credit line with JPMorgan Chase are a “precautionary action to navigate the current uncertainty,” according to a statement from Chemours.
The company reported that it does not currently intend to use the funds but is choosing to hold them to hedge against future capital or operational needs. It expects to repay the funds “when the uncertainty in the global markets subsides.”
“At Chemours, protecting the safety and wellbeing of our employees while supporting our customers is our top priority. We remain focused on executing our business continuity plans that will keep our workforce healthy, maintain a reliable supply to our customers, and deliver results to our shareholders,” said Chemours President and CEO Mark Vergnano in a statement announcing the move. “This action helps to balance our access to domestic and non-domestic cash, and increase our near-term financial flexibility.”
As of Dec. 31, 2019, the Wilmington-based chemical company held a total liquidity of about $1.6 billion, according to U.S. Securities and Exchange Commission filings. Its current debt also doesn’t mature until 2023.
“While the current environment remains uncertain, we remain confident in our financial position, the strength of our businesses, and the long-term prospects for Chemours,” Vergnano added.
Chemours is far from alone in corporate America in tapping into existing revolving credit lines in recent days as a protection against a longer-than-anticipated downturn in the economy. The New York Times reported that banks loaned $240 billion to companies in a single week last month – twice what they would typically loan in new deals in a year.
Like most of the stock market, Chemours was rocked in first quarter trading, losing 46% of its share value between Jan. 1 and March 31. As of close Friday, April 3, its share value had continued to fall, closing at $7.26 a share – 82% off its 52-week high of $41.60.
By Jacob Owens