Boeing Co. has launched a share sale worth almost $19 billion.
It is worth noting that the mentioned share sale is one of the largest in the history of public companies. In this case, Boeing aims to address the liquidity problem. Currently, the manufacturer of planes is also making efforts to stave off a potential downgrade of the credit rating to junk.
Boeing has offered to sell 90 million common shares and depository shares worth about $5 billion. The relevant information is contained in the company’s statement released on Monday, October 28.
The common-share portion alone will be just under $14 billion, based on Friday’s closing price of $155.01 per equity. According to media reports, this will be the largest share sale in the United States since SoftBank Group Corp. in 2020. sold part of its stake in T-Mobile US Inc.
On Monday in New York, the value of Boeing shares closed down 2.8% at $150.69 per equity. It is worth noting that since the beginning of the current year, the corresponding indicator has fallen by about 42%. In this case, the second-worst performance in the Dow Jones Industrial Average is observed.
According to media reports, the fundraising total could rise to about $21.8 billion.
Receiving new funds is highly likely to solve one of the most urgent tasks facing Boeing chief executive officer Kelly Ortberg. Currently, he is facing financial problems that have become an insurmountable reality for the company against the background of years of turmoil and a strike lasting for the seventh week and having an extremely negative impact on the manufacturing process of the 737 Max jetliner, in fact, the main product of the firm in terms of revenue generated.
Nowadays, Boeing needs capital infusion to maintain its investment-grade rating. The company also needs financing for ramp-up production after the completion of the walkout.
Boeing intends to use about $4 billion in cash during the fourth quarter of 2024. The implementation of this solution will likely cause the outflow of free cash to about $14 billion for the year. In the first half of 2025, the plane manufacturer intends to continue burning cash. The relevant plan is related to the fact that the company restarts the operation of its factories, including the assembly lines of the 737 Max jetliner.
Last week, Boeing received clearance from the United States Securities and Exchange Commission to sell as much as $25 billion of equity and debt. The company has also entered into a separate new credit agreement worth $10 billion, which provides it with additional short-term access to liquidity.
As we have reported earlier, Revolut Signs Agreements With Investors for Secondary Share Sale.
