WASHINGTON – General Dynamics has received $ 1 billion since renegotiating $ 10 billion contract for Canada to sell light armored vehicles to Saudi Arabia, company officials said on an income call this week.
In an agreement last month, Canada lifted a ban on the sale of weapons to Saudi Arabia, which in turn agreed to a faster payment schedule for LAV. Canada has had a vehicle detained since 2018, following the murder of Saudi journalist Jamal Khashoggi, and in October, Saudi Arabia has collected $ 1.5 billion in payments back to General Dynamics.
Amid grim news on revenue calls that GD’s revenue fell $ 512 million in connection with the COVID-19 pandemic, General Dynamics Chief Financial Officer Jason Aiken highlighted, “the formal signing of a restructuring contract on the Canadian international program, which resolves all issues to the satisfaction of the parties.”
“Regarding our fixed receivables, you might remember that we received $ 500 million at the beginning of the first quarter and we received another $ 500 million this month. This will greatly help to free up cash flow in the second quarter, “said Aiken.
“We will start a regular rhythm of scheduled payments in 2021 according to shipping and make further progress in scheduled amortization arrearage.”
The Combat Systems division of GD had revenues of $ 1.7 billion, up 4.4 percent compared to the same quarter last year, and sales to the US government rose 12 percent. GD’s aerospace business segment also has revenues of $ 1.7 billion, but that represents a 23 percent decrease from the same quarter last year.
On April 9, the Canadian Foreign Minister, François-Philippe Champagne, announced that Ottawa “could obtain a significant increase” in the LAV contract, including more freedom for the Canadian government to talk about it.
Under the new provisions, Canada can also delay or refuse export permits without penalty if it knows that Saudi Arabia does not use vehicles for stated purposes. Ottawa will also review permit applications on a case-by-case basis to ensure they comply with Canadian law and the UN Arms Trade Agreement.
Although the Trudeau government is under political pressure to cancel the LAV deal on human rights issues, Champagne said its cancellation would “result in billions of dollars of damage” and risk thousands of Canadian jobs throughout the defense supply chain.
The vehicle was made by a subsidiary of General Dynamics Land Systems in London, Ontario.