(Bloomberg) — Boeing Co. is selling about $19 billion, the largest ever for a publicly traded company, to meet the troubled aircraft maker’s liquidity needs and avoid a potential downgrade to junk status. has started selling its shares.
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The company proposed selling 90 million common shares and about $5 billion in deposited shares, according to a statement Monday, confirming an earlier report by Bloomberg News.
Based on Friday’s closing price of $155.01, the common stock portion alone would total just under $14 billion. This is the biggest stock sale since SoftBank Group sold part of its stake in T-Mobile US in 2020, according to data compiled by Bloomberg.
Boeing shares rose 0.9% in pre-market U.S. trading as investors hailed the sale as bringing stability to the company’s balance sheet after falling 40% this year.
The over-allotment could bring the total funding to about $21.8 billion, according to Bloomberg calculations.
The cash injection clears one of new CEO Kelly Ortberg’s most urgent tasks. He said years of disruption and the fallout from the strike, now in its seventh week, have devastated the company’s production of the 737 Max jetliner, its main cash cow, and its balance sheet has been decimated. It’s tight. Boeing needs a capital injection to maintain its investment-grade rating and fund production increases after the strike ends.
The company is on pace to use about $4 billion in cash in the fourth quarter, resulting in annual free cash outflow of about $14 billion. Aircraft makers expect to continue using cash into the first half of next year to restart aircraft factories, including assembly lines for the 737 Max jetliner.
Boeing factory workers voted last week to reject the company’s latest contract proposal, which includes a 35% pay increase over four years. Ortberg said in a memo to employees on Oct. 11 that the company plans to reduce its workforce by about 10%.
On October 23, the company received permission from the U.S. Securities and Exchange Commission to sell up to $25 billion in stock and debt. Boeing also has a separate new $10 billion credit agreement that will give the company “access to additional short-term liquidity as we navigate this challenging environment.”
Mr. Ortberg is also considering options to streamline Boeing’s broad portfolio. He has begun a review of the business, with the CEO expected to make a decision by the end of the year. As part of the review, the company is considering options for the future of its troubled Starliner space capsule program, Bloomberg News reported.
The underwriters have an option to add 13.5 million common shares and $750 million in deposited shares to cover over-allotments.
PJT Partners is serving as Boeing’s financial advisor for this product, the company said in a statement.
Goldman Sachs, BofA Securities, Citigroup, and JP Morgan acted as lead bookrunning managers, with Wells Fargo Securities, BNP Paribas, Deutsche Bank Securities, Mizuho Securities, Morgan Stanley, RBC Capital Markets, and SMBC Nikko Securities serves as joint bookrunning manager.
–With assistance from David Carnevali, Crystal Tse, and Swetha Gopinath.
(Update offering details and update shares)
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