The German governments refusal to issue export permits has been putting a strain on Heckler & Koch’s finances. According to a report from Moody’s Investor Services, last week the German government approved exports to Middle Eastern and other non-NATO countries. An extract from the report says …

…Last Thursday, the German government approved a number of arms export licences to Middle Eastern and other countries that are not members of the North Atlantic Treaty Organization (NATO). The licence approvals included licences for Heckler & Koch GmbH (Caa3 negative), which is credit positive because they will support the company’s free cash flow. Improved cash flow is essential if the company is to make its 14 million semi-annual interest payments in 2015. Based on the number of weapons cited in the government’s list of licence approvals, we expect the cash effect to be a portion of the 50 million (which equals around 23% of 2013 revenues) worth of Heckler & Koch’s export requests as of June. Nevertheless, it will increase 2014 earnings and most importantly the company’s cash flow in 2014 and early 2015. We previously assumed no contributions from sales requiring export licences in 2014. However, we do not expect these approvals to improve the company’s low unrestricted cash balance

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Thanks to Axel for the tip.