Boeing's Ambitious $15 Billion Capital Raise Set to Launch

Boeing Co. is gearing up to launch a significant capital raise, potentially exceeding $15 billion, as early as Monday. This move aims to bolster the company's liquidity amid ongoing challenges, including a prolonged strike and substantial cash outflows. The offering is expected to include both shares and convertible debt, with the possibility of raising even more depending on investor demand.

Key Takeaways

• Boeing plans to raise over $15 billion to enhance liquidity.
• The offering may include shares and convertible debt.
• The company received SEC clearance to sell up to $25 billion in equity and debt.
• Boeing is facing a significant cash outflow, projected at $14 billion for the year.
• Recent labor disputes have led to a rejection of contract offers by factory workers.

Context of the Capital Raise

Boeing's decision to pursue this capital raise comes at a critical time for the company. The aerospace giant has been grappling with a series of setbacks, including a strike that has now entered its seventh week. This labor dispute has not only affected production but has also strained the company's financial resources.

The capital infusion is crucial for Boeing to maintain its investment-grade credit rating, which is under threat due to its financial struggles. Analysts have noted that the company is on track to burn through approximately $4 billion in cash during the fourth quarter alone, contributing to an estimated total cash outflow of around $14 billion for the year.

Details of the Offering

The upcoming capital raise is expected to be one of the largest equity offerings in recent years. Here are some key details:

• Amount: Over $15 billion, with potential for increase based on demand.
• Structure: Likely to include both new shares and debt that can be converted into equity.
• SEC Approval: Boeing has received clearance to sell up to $25 billion in equity and debt, providing flexibility in its fundraising efforts.

Market Reaction

Boeing's stock has faced significant pressure, declining more than 40% this year. The company's shares fell by 0.9% in premarket trading on Monday, reflecting investor concerns about its financial health and the ongoing labor issues. The recent rejection of a contract offer, which included a proposed 35% wage increase over four years, has further complicated the situation.

Future Outlook

As Boeing prepares for this capital raise, the company is also looking to cut its workforce by approximately 10%. This reduction may include layoffs among executives and managers, as outlined in a memo from CEO Kelly Ortberg. The company is hopeful that the capital raised will not only stabilize its finances but also support a recovery as it resumes production, particularly for its flagship 737 Max jetliner.

In summary, Boeing's ambitious plan to raise over $15 billion is a critical step in navigating its current challenges. The outcome of this offering will be closely watched by investors and industry analysts alike, as it could significantly impact the company's future trajectory.

Sources

• Boeing plans over $15 billion capital hike as soon as Monday, Yahoo Finance.
• Yahoo is part of the Yahoo family of brands, Yahoo Finance.ca.
• Boeing plans over $15 billion capital hike as soon as Monday, Yahoo Finance.ca.