Sportswear powerhouse Adidas is reportedly planning to issue a multi-billion euro bond to replace the state loan it received as a result of the coronavirus crisis. The company is looking to move away from relying on the state-backed loan and has initiated the process of obtaining a credit rating from a major ratings agency. However, Adidas has neither confirmed nor denied these reports.
The decision to issue a bond comes after Adidas agreed to a 2.4 billion euro government-backed loan on April 14. This move was in response to the closure of stores and the postponement of major sporting events, such as the Olympic Games and Euro soccer tournament. The current circumstances have made it difficult for the company to provide a full-year outlook, and its first-quarter results are scheduled to be released on Monday.
The recently obtained 3 billion euro loan includes 2.4 billion euros from the KfW state development bank and an additional 600 million euros from a consortium that includes UniCredit, Bank of America, Citibank, Deutsche Bank, HSBC, Mizuho Bank, and Standard Chartered Bank. As a condition of the syndicated loan, Adidas must suspend all dividend payments for the duration of the loan.
By issuing a multi-billion euro bond, Adidas aims to reduce its reliance on the state-backed loan and regain financial stability during the ongoing coronavirus crisis. Obtaining a credit rating from a well-established ratings agency could provide an indication of the company’s financial health and potentially boost investor confidence.
It remains to be seen how the bond issuance will unfold, and whether Adidas will ultimately proceed with this strategy. As it continues to navigate these challenging times, the sportswear giant will adapt its business model and strategies to ensure long-term success.
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