Image Credit: St. Louis Business Journal
Boeing Co. is preparing a capital-raising initiative, potentially launching as early as Monday, to strengthen its liquidity, according to sources familiar with the situation. The company aims to secure over $15 billion, though the final amount may increase based on investor demand. Boeing’s advisors have been identifying potential investors, although specifics remain confidential.
The planned fundraising is expected to include both shares and debt convertible into equity. On October 23, Boeing received authorization from the U.S. Securities and Exchange Commission to issue up to $25 billion in equity and debt, a step intended to preserve its investment-grade credit rating. Although discussions are ongoing, the details and timing of the offering may still change. Boeing has declined to comment on the matter.
If successful, a $15 billion share sale would represent the largest equity offering since SoftBank Group’s T-Mobile US Inc. stake sale in 2020. The funds are crucial for Boeing to maintain its credit rating and support its recovery from a prolonged seven-week strike. Boeing’s cash burn is expected to reach around $4 billion in the fourth quarter, with an anticipated total free-cash outflow of approximately $14 billion for the year. Boeing projects continued cash burn into the first half of next year as it restarts production lines, including those for its 737 Max jetliner.
Factory workers recently rejected a contract offer from Boeing that proposed a 35% wage increase over four years. The company is now planning a workforce reduction of about 10%, including potential layoffs across various levels, CEO Kelly Ortberg stated in a memo on October 11.
Earlier, Boeing was exploring a capital raise of at least $10 billion through a new stock issuance. Analysts, including Ronald Epstein from Bank of America, estimate the fundraising could range from $18 billion to $20 billion. In addition to this planned offering, Boeing announced on October 15 a new $10 billion credit agreement to bolster short-term liquidity.
In its third-quarter report on October 23, Boeing disclosed revenue of $17.8 billion, falling short of forecasts, with widening losses in its largest divisions. This year, Boeing’s shares have declined by over 40%. CEO Ortberg is currently conducting a portfolio review expected to conclude by year-end, including an assessment of its Starliner space capsule program. Earlier reports from Reuters indicated Boeing was targeting a $15 billion capital raise through stock and convertible bonds.
Paraphrasing text from "Bloomberg" all rights reserved by the original author.