Boeing launches offering to raise roughly $19 billion to shore up finances
2024.10.28 07:08
(Reuters) -Boeing on Monday launched an offering of 90 million common shares and $5 billion of depositary shares as the planemaker looks to strengthen its finances squeezed by a more than month-long strike by its workers and preserve its investment-grade credit rating.
The company’s shares fell 1% in premarket trading.
The move will boost Boeing (NYSE:)’s battered finances, which have worsened since roughly 33,000 of its workers represented by the machinists union walked off their jobs in September, halting production of models including its cash-cow 737 MAX aircraft.
The strike is costing the company more than $1 billion per month, according to one estimate that was released before Boeing announced it would cut 10% of its workforce.
Earlier this month, Boeing entered into a $10 billion credit agreement with banks and announced plans to raise up to $25 billion through stock and debt offerings.
The planemaker was already reeling under a regulator-imposed cap on production of its MAX jets after a January mid-air accident.
Last week, the company reported a $6 billion third-quarter loss and said it would burn cash next year. The same day, striking workers rebuffed an improved contract.
Rating agencies have warned that a prolonged strike may lead to a downgrade in Boeing’s credit rating, likely pushing up the cost of capital.
S&P Global has warned of a ratings downgrade if Boeing slipped below target cash balance of $10 billion or if the company had to increase leverage to meet debt maturities.
Boeing, which has never fallen below the investment-grade rating, had cash and marketable securities of $10.50 billion as of Sept. 30.
It has $11.5 billion of debt maturing through Feb. 1, 2026, and is committed to issuing $4.7 billion of its shares to acquire Spirit AeroSystems (NYSE:) and assume its debt.
Reuters had reported earlier this month Boeing was examining options to raise billions of dollars through a sale of stock and equity-like securities.
Boeing delivered 33 jets in September, down from 40 in August.
