Warren Buffett buys Boeing for one dollar. Deal of a lifetime says Buffett

Here comes what will happen when we hit the very lowest financial rock-bottom:

April 16, 2020: BREAKING FAKE NEWS/BlueMountain Financial News:

The US Government and Secretary of Treasury Steve Mnuchin today announces the sale of the airline manufacturer Boeing to US billionaires and investor legends Warren E. Buffett (89 years), Charlie Munger (96 years) and their shareholders in the investment company Berkshire Hathaway Inc.

Mr. Buffett buys Boeing out of Chapter 11 bankruptcy. Boeing, seeking reorganization, has effectively been under administration since it filed at March 25, 2020. The company asked for a USD 60bn aid package for itself and suppliers at March 18, which was denied. According to sources, Boeing management entered the crisis with little credibility and few friends in Washington.

“We wanted to safeguard vital, critical US national interests and employment in Boeing. But we definitely do not want to support the management of Boeing and its existing stock owners,” says Steven Mnuchin, US Secretary of Treasury.

“Management aggressively bought back shares over six years for USD 43bn, then asked for an enlarged contribution from the Government when they ran out of capital. Further, through greed and lack of care, they build airplanes which twice crashed terribly,” he adds. 

Senior credit holders in Boeing are forced to accept a haircut of 45 percent, while high yield debts are written off. Other stakeholders related to Boeing have also accepted undisclosed losses in exchange for a continued cooperation with Boeing.

“We entered this terrible financial meltdown with lots of cash on our balance sheet, which we are now employing to the best for both the US and our shareholders. We always look out for attractive deals when valuation are at their lowest and fear at its highest,” says Mr. Buffett.

While taking over the existing shares in Boeing for a symbolic one dollar, Berkshire Hathaway has promised to insert a new management, adding USD 25bn new equity and a USD 15bn credit facility. Berkshire Hathaway was secured a 15 year funding package from the Government at the 30 year US Treasury rate + 65 bp.

Mr. Buffett believes he has yet again made the deal of a lifetime, as when he bought USD 5bn of preferred stock in Goldman Sachs in September 2008 during the financial crisis.

“When all this is over, private individuals and businessmen will have to travel again, and the airlines need to replace their existing fleet. The future looks bright. Charlie and I look forward to travel with these fine Boeing airplanes for the next twenty years,” he adds. 

Links to real stories:

Bill Ackman: Boeing needs US Government bailout

NYTimes: Boeing and the Economy, it doesn’t look good

Buffett: Betting big on airlines