HARLEY-DAVIDSON, Inc. and its Harley-Davidson Financial Services (HDFS) subsidiary have finalized agreements that, in combination with other previously completed transactions, provide the approximately $1 billion in funding capacity that the company anticipates is needed this year for HDFS' retail and wholesale lending activities.
HDFS increased the size of an existing $500 million asset-backed commercial paper conduit facility to up to $1.2 billion, and replaced a 364-day, $950 million bank credit facility expiring July 31, 2009 with a new 364-day, $625 million facility.
Both credit facilities expire April 29, 2010. Together, the two agreements provide additional available credit of up to approximately $375 million for the lending activities of HDFS.
On Jan. 23, Harley-Davidson announced that additional funding for HDFS lending activities would be a strategic priority in the current economy. In February, the company completed an offering of $600 million in senior unsecured notes – those notes will be due in 2014 and will bear interest at a rate of 15 percent per annum. Finally, first-and second-quarter 2009 dividend reductions combined are preserving about another $100 million in cash.
HDFS reported first quarter operating income of $34.9 million, a decrease of $24 million or 40.8 percent compared to the year-ago quarter.