CAPSTONE HEADWATERS REPORTS: COMMERCIAL AEROSPACE INDUSTRY HITS DOWNDRAFT, DEFENSE & GOVERNMENT FIND SHELTER

Boston, MA, May 5, 2020 – Capstone Headwaters released its annual Aerospace, Defense, Government, and Security 2020 M&A Update, reporting on the current environment and dramatic fall out from the COVID-19 pandemic; together with observations from those sectors less impacted; and a review of last year including Merger & Acquisition (M&A) activity.

The Aerospace industry has always been cyclical and capital intensive; however, it has never witnessed anything like the current downdraft. Participants are borrowing from the playbook of banks in the financial crisis and seeking government support.

The U.S. Federal Government responded to the COVID-19 pandemic with the CARES (Coronavirus Aid, Relief, and, Economic Security) Act, the largest economic rescue plan in U.S. history seeking to bolster the economy via a $2 trillion relief package as well as other measures. Legislation was designed to protect jobs and those hardest hit and includes close to $100 billion in specific funding for the Aerospace and Defense sector.

The lifeblood of the economy is credit availability and we expect lenders will grab their recession playbook from the shelf, dust it off and do what they have done before, albeit with greater government support. We are encouraging borrowers to: maximize liquidity, engage with existing lenders, and prepare materials including scenario planning, sensitized models, cost analysis and mitigation plans.