Heavy trucks and bus-make Navistar International Corp (NYSE:NAV) may find some relief from its troubles now. The company said on Thursday it has got commitment from a clutch of banks for a $1 billion loan that will tide it over its financial crunch.
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The company is racing to comply with environmental and emission norms set by the U.S. Environmental Protection Agency for its diesel engines. For this it plans to purchase diesel engines and components from Cummins that is compliant with these norms.
The move to get new engines comes after a costly, strategic mistake that the company made with the intention of complying with emission norms without having to install new, expensive after-treatment equipment. More than two years back the company invested about $700 million in a technology that was supposed to recycle diesel exhaust back through the engine.
However this is yet to be ratified by the EPA and certification is still pending. Last month Navistar realised its folly in persisting with a technology that had not worked and said it would go back to the traditional method of installing after-treatment systems.
However it has vowed to continue with its research and combine it with the existing after-treatment system to ensure that its vehicles meet all existing emission norms as well as further into the future.
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Separately, the company is also facing a probe by the Securities and Exchange Commission into issues related to accounting and disclosure norms.
Interestingly Navistar has a joint venture with India’s Mahindra & Mahindra Ltd t make heavy trucks in the country.
Shares of NAV slumped 13.44% to $21.44 on Thursday and made multi-year low of $20.07.