Heckler & Koch Bonds Climb to 15-Month High After Cash Injection

Bonds of Heckler & Koch AG rose to a 15-month high after a 60 million-euro ($64 million) cash injection from its majority shareholder boosted liquidity more than fivefold.

The German gunmaker’s 295 million euros of bonds due in May 2018 gained 4 cents on the euro on Monday and are now quoted at 83.8 cents, the highest since August 2014, according data compiled by Bloomberg. The cash provided by majority shareholder Andreas Heeschen last week increased liquidity to 74 million euros from 13 million euros at the end of September, according to company documents seen by Bloomberg.

Heeschen’s money will strengthen Heckler & Koch’s balance sheet after the German government disputed the quality of rifles supplied to the nation’s military and blocked exports to some of the company’s largest Middle East customers. The maker of the rifle that may have killed Osama bin Laden is now focusing on expanding sales in the U.S. to make up for lost contracts.

Officials at Heckler & Koch confirmed the details of the cash injection.

The new money will be used to help repay 15 million euros drawn from a secured credit facility to cover interest payments on the notes, according to the company documents. It will also partially pay down a separate loan. 

“We want to send a strong signal to our clients that Heckler & Koch continues to be a reliable and growth-oriented partner,” Heeschen said in the document e-mailed to bondholders. “Heckler & Koch is an important element of the supply chain and the security infrastructure of Germany and its NATO partners. We expect Europe to become more exposed to conflicts on the international stage in future.”