Boeing has filed paperwork with U.S. regulators to raise up to $25 billion through a combination of stock and debt offerings. This move comes as the company faces significant financial challenges due to a strike by union workers that started on September 13 and a recent incident involving its popular 737 MAX jet.
The company is trying to stabilize its finances, particularly after the production of the 737 MAX was impacted by a mid-air door panel failure earlier this year. Analysts believe Boeing needs to raise between $10 billion and $15 billion to maintain its credit ratings, which are currently just above junk status.
In addition to the stock offering, Boeing has secured a $10 billion credit agreement with major banks like Bank of America, Citibank, Goldman Sachs, and JPMorgan. This funding is crucial as the company faces $11.5 billion in debt that is due by February 2026.
Boeing has not yet used the new credit facility or its existing credit line. The company is under pressure due to the ongoing strike, which costs around $1 billion a month, and has also committed to issuing $4.7 billion in shares to acquire Spirit AeroSystems.
According to a filing, the funds raised will be used for general corporate purposes. As of June 30, Boeing had $10.89 billion in cash and cash equivalents.
Standard & Poor’s (S&P) Global Ratings has noted that Boeing’s filing for new funds is a necessary step to help preserve its credit rating. They also believe the new credit facility is a sensible precaution. Ultimately, they state that Boeing’s financial recovery largely depends on resolving the ongoing strike.
Additionally, Fitch Ratings mentioned that the shelf registration will provide Boeing with broader market access, including the ability to issue equity, which could help reduce the risks of a credit downgrade.
Update (28th October 2024)
Boeing secures $21.1 billion through a massive equity raise, with banks pricing the sale of 112.5 million shares, representing 18% of the company, at $143 per share, according to IFR.
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