Embraer secures $600m loan from BNDES, private banks

Brazilian planemaker Embraer has secured a $600 million loan, partly backed by Brazil’s government, at the same time as a key executive departed the planemaker weeks after a potentially transformational deal with Boeing Co collapsed.

The $600 million loan will be split half and half between state bank BNDES and private banks. 

Under the agreed-upon terms, Embraer will not be allowed to lay off any employees for two months after receiving the loan, said Marcos Rossi, a BNDES executive in charge of aerospace and defense deals, among other industries.

The loan has come together quickly in Brazil, where airlines and automakers have been scrambling to finalize a bailout deal. Both sectors have been clamoring for state help since March. 

Companies from both industries have balked at BNDES’ requirements, which were significantly more favourable in Embraer’s case. While BNDES has demanded airlines put up equity collateral and automakers secure loans with a pledge from headquarters, the lender did not require equity from Embraer, which has more cash and less debt than Brazil’s airlines and automakers.

Meanwhile, John Slattery, who headed Embraer’s commercial aviation unit, will become chief executive of aircraft engine-maker GE Aviation. Slattery had championed the $4.2 billion Boeing-Embraer agreement, and was set to become a Boeing executive in charge of the Embraer partnership once the deal closed for Boeing to take control of Embraer’s commercial planes unit. But the deal fell apart in April.