Boeing launched a share offering worth almost US$19 billion (approximately R$108.2 billion) to meet liquidity needs and avoid a possible downgrade of its credit rating to “junk”. The offering is one of the largest ever made by a publicly traded company in the United States.
The company offered to sell 90 million shares of common stock and about $5 billion in stock receipts, according to a statement on Monday.
By itself, the common shares total just under $14 billion, based on Friday’s closing price of $155.01. This would be the biggest U.S. stock sale since SoftBank Group sold part of its stake in T-Mobile in 2020, according to Bloomberg data.
According to Bloomberg calculations, total fundraising could rise to around US$21.8 billion, according to supplementary lots. Since the beginning of the year, the company’s shares have fallen by around 40%, the second worst performance in the Dow Jones Industrial Average.
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The injection of resources into the company would eliminate one of the most urgent tasks of the new CEO, Robert Kelly Ortberg. It is dealing with a balance sheet damaged by years of turmoil and the fallout from a strike, now in its seventh week, that has crippled manufacturing of the company’s flagship product, the 737 Max jet. To maintain its investment-grade rating and To finance the resumption of production after the strike ends, Boeing needs the capital infusion.
The company is on track to use $4 billion during the fourth quarter, which would bring its free cash outflow to about $14 billion for the year. And the planemaker expects to keep burning through cash through the first half of next year as it restarts its plane factories, including the assembly lines for its 737 Max jet, its main source of revenue.
Boeing employees on strike
Last week, workers at Boeing factories voted to reject the company’s proposed deal, which included a 35% pay increase spread over four years. The company plans to reduce its workforce by about 10%, Ortberg said in an Oct. 11 memo to employees.
On October 23, the company received authorization from the U.S. Securities and Exchange Commission to sell up to $25 billion in equity and debt. Boeing also has a separate new credit agreement worth $10 billion, which guarantees “additional short-term access to liquidity while navigating a challenging environment.”
Ortberg faces the dilemma of simplifying Boeing’s broad portfolio: a task he hopes to complete by the end of the year. Among them, the company is evaluating options for the future of its troubled Starliner space capsule program.
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