Navistar announces actions designed to enhance competitive position

Goal to also drive profitable growth and increase shareholder value including accelerating delivery of In-Cylinder Technology Plus.

Navistar International Corporation announced significant actions that build on the company's previously announced introduction of ICT+ (In-Cylinder Technology Plus) and are designed to enhance the company's competitive position and drive profitable growth and shareholder value. These actions include:

  • Adopting a U.S. market proven aftertreatment solution to accelerate delivery of ICT+, Navistar's next generation clean engine solution;
  • A market transition plan for Class 8 engine sales; and 
  • Securing a $1.0 billion loan commitment, which further enhances Navistar's liquidity.

Navistar also provided an outlook for fiscal third quarter 2012 and announced it will provide updated guidance on full-year fiscal 2012 when the company releases its third quarter results in September.

"The actions announced today establish a clear path forward for Navistar and position the company to deliver a differentiated product to our customers and provide a platform for generating profitable growth," said Daniel C. Ustian, Navistar chairman, president and CEO. 

ICT+ Update

As previously announced, the introduction of ICT+ leverages the advances Navistar has made in clean engine technology, while also providing greater certainty for its customers, dealers, and other key constituents. To accelerate delivery of ICT+, Navistar has entered into a non-binding memorandum of understanding, under which Cummins Emission Solutions would supply its proven urea-based aftertreatment system to Navistar. This would be combined with Navistar's advanced in-cylinder engine to create ICT+.

Navistar expects that by combining Cummins' aftertreatment system with its existing MaxxForce engines, its ICT+ will meet 2010 U.S. Environmental Protection Agency (EPA) emissions regulations and position the company to meet greenhouse gas (GHG) rules in advance of 2014 and 2017 requirements. "With this clean engine solution, we are taking the best of both technology paths to provide our customers with the cleanest and most fuel efficient engines and trucks on the market and to meet stringent U.S. emission regulations," Ustian said.

Market Transition Plan

During the transition to ICT+, Navistar will continue to build and ship current model EPA-compliant trucks in all vehicle classes using appropriate combinations of earned emissions credits and/or non-conformance penalties (NCPs). The company continues to have productive discussions with the EPA and the California Air Resources Board (CARB) regarding its transition to ICT+.

As part of the expanded relationship with Cummins Inc., Navistar plans to offer the Cummins ISX15 engine in certain models, expanding the company's vehicle lineup and on-highway market opportunity.  Navistar plans to introduce the Cummins ISX15 engine as a part of its North American on-highway truck line-up beginning in January 2013 and to begin the introduction of ICT+ in its MaxxForce 13-liter in early 2013.

Financing Commitment & Cash Update

The company anticipates that its manufacturing cash will be between $575 million and $625 million at the end of the third quarter. Additionally, to support these actions and to improve its financial flexibility, Navistar has entered into a firm commitment letter with a group of banks led by JPMorgan Chase Bank, N.A. and Goldman Sachs Lending Partners LLC and including Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse pursuant to which the banks have committed to provide an up to five year $1.0 billion senior secured term loan.  A portion of the proceeds from this financing will be used to pay down the existing borrowings under Navistar's ABL credit facility.

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