McDonald's Fortifies Cash Position as Virus Crimps Business -- Update

   By Micah Maidenberg 
 

McDonald's Corp. borrowed another $1 billion to bolster its cash balances, describing the new loan as a precautionary measure that will provide it with financial flexibility as the coronavirus decimates its business.

The fast-food chain also said Thursday it has an additional $3.5 billion in loans it can draw upon but hasn't done so yet.

Yesterday, the company raised another $3.5 billion, according to a filing from then.

Chicago-based McDonald's said Wednesday that it is working to support liquidity among the franchisees that run its restaurants, including deferring rent payments. In the U.S. and other markets, McDonald's has closed dining rooms and is only offering customers drive-thru, delivery and take-out meals, in line with government restrictions.

Investors expect sales at the company -- as well as other restaurant chains -- to take a major hit in the second quarter. Analysts at Robert W. Baird & Co. on Wednesday said they believe that global comparable-store sales at McDonald's will fall 30% in the quarter.

Companies have moved to fortify their cash positions to prepare for weaker economic growth and business activity tied to the pandemic. Some have stopped paying dividends and cut such payouts. Other companies are drawing down credit lines and suspending share buybacks.

Write to Micah Maidenberg at [e-mail]

(END) Dow Jones Newswires

March 26, 2020 15:19 ET (19:19 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.