Amid concerns that Boeing does not have enough cash on-hand to support operations, the US airframer disclosed on 28 October a public offering of 90 million shares, plus $5 billion of depository shares.
Based on the most recent closing price of Boeing’s stock, selling 90 million shares of common stock would generate roughly $14 billion.
Taken altogether, the financial manoeuvres would provide Boeing with a $19 billion cash infusion.
It plans to offer a 30-day option to purchase up to an additional 13.5 million shares of stock and $750 million of depositary shares, ”solely to cover over-allotments, if any”, Boeing says.
”Boeing intends to use the net proceeds from the offerings for general corporate purposes, which may include, among other things, repayment of debt, additions to working capital, capital expenditures and funding and investments in the company’s subsidiaries,” it says.
Boeing has been losing billions of dollars each month during a prolonged machinists’ strike, which union members voted on 23 October to extend. It lost $6.2 billion in the third quarter and faces a severe cash crunch, with $4 billion of debt coming due in the first half of next year.
The company ended October with $10 billion in cash and equivalents, roughly the minimum amount that analysts say it needs to stay afloat.
The strike by Boeing’s 33,000-strong machinists’ union has forced 737, 767 and 777 production to cease, with widespread ramifications across the aerospace industry.
On 11 October, Boeing said it would lay off 10% of its global workforce – roughly 17,000 employees – and that it will wrap up production of the 767, in addition to further delaying the still-not-certificated 777-9’s expected service-entry date into 2026.
The aerospace manufacturer on 15 October reached an agreement with lenders to secure up to $10 billion in additional credit, and also filed documents with the US Securities and Exchange Commission as a precursor to raising as much as $25 billion by selling stock or issuing unsecured debt – known as a “shelf registration”.
Credit rating firm Moody’s is currently performing a review of Boeing’s credit rating, which risks being downgraded amid the company’s financial struggles.
