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Boeing News: Boeing Plans $15 Billion Capital Raise

According to latest Boeing news reports, Boeing is reportedly planning a capital raise exceeding $15 billion. This initiative will involve a blend of stock issuance and convertible debt as the company seeks to strengthen its balance sheet amidst union strikes, financial losses and production setbacks.

Boeing News: Boeing Plans $15 Billion Capital Raise

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Boeing’s capital raise is expected to generate more than $15 billion, with potential for increase depending on investor demand. This would be the most equity offering since SoftBank Group Corp.’s partial divestment of its stake in T-Mobile US Inc. in 2020.

According to latest Boeing news reports, Boeing received clearance from the US Securities and Exchange Commission on October 23 to offer as much as $25 billion in equity and debt.

The transaction will likely include a mix of shares and debt instruments with the latter being convertible into equity.

Convertible preferred shares are anticipated to be part of the offering, which may appeal to investors seeking hybrid instruments.

Boeing’s immediate goal is to prevent its credit rating from slipping into junk status. In addition to the capital raise, Boeing secured a $10 billion credit line with Bank of America, Citibank, Goldman Sachs and JPMorgan.

Maintaining an investment-grade rating is critical for Boeing to access financing at reasonable rates.

According to latest Boeing news reports, Over 33,000 workers, primarily on the US West Coast have been on strike for nearly seven weeks. The International Association of Machinists and Aerospace Workers recently rejected Boeing’s offer, which included a 35% wage increase spread across four years.

Strikes have disrupted production of Boeing’s core models including the 737 Max, 777 and 767.

Boeing anticipates a cash outflow of approximately $4 billion for the fourth quarter, raising the total cash burn for the year to about $14 billion.

The company reported a third-quarter loss of $6.1 billion, exacerbated by the strike and operational delays. Boeing forecasts cash usage through the first half of 2025.

Boeing reported a huge $6 billion loss in the third quarter. This situation is expected to persist, with Boeing projecting free-cash outflows nearing $14 billion by the end of 2024.

To manage cash flow, Boeing had previously announced a reduction of nearly 10% in its workforce or about 17,000 positions, as a cost-cutting measure.

Boeing obtained clearance from the US Securities and Exchange Commission to raise up to $25 billion through equity and debt sales.

This higher cap offers Boeing flexibility, allowing it to exceed the initial $15 billion target if necessary to meet financial demands and maintain its investment-grade status.

Boeing news reports underlines the importance of this SEC approval, which opens doors for substantial financial maneuvering as it seeks a recovery strategy.

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According to latest Boeing news reports, Boeing secured a $10 billion credit line from major financial institutions including Bank of America, Citibank, Goldman Sachs and JPMorgan.

This credit line will support Boeing’s operational and production needs while it undergoes the capital raise, adding to its current cash reserves.

Boeing’s commercial airplane division particularly the 737 Max production line and it has been severely impacted by the strike.

Financial setbacks have extended to Boeing’s defense and space units, with the Starliner space capsule program under close scrutiny due to cost overruns.

Boeing’s third-quarter revenue of $17.8 billion fell short of expectations, with widening losses in its core commercial and defense sectors.

According to latest Boeing news reports, Boeing announced plans to downsize its global workforce by approximately 10%, translating to around 17,000 job cuts.

Analysts have estimated that Boeing could raise between $18 billion and $20 billion from the equity and debt offerings if demand is high.

Boeing stock has seen volatility, losing 40% of its value in 2024 alone. Additional losses were recorded in pre-market trading following Boeing news reports on the company’s financial strain.

Boeing anticipates continued cash burn into 2025 primarily due to the strike, production delays and the ramp-up time needed for airplane factories.

Analysts estimate Boeing’s free-cash flow to remain negative in early 2025 as the company works to resolve current strikes and clear production backlogs.

Boeing’s capital raise will thus be essential for funding operations through this period of cash outflows, with a focus on preserving liquidity.

According to latest Boeing news reports, Boeing plans to reduce its global workforce by nearly 10%, amounting to about 17,000 jobs. The layoffs combined with delays in new product launches like the 777X.

Given the SEC’s $25 billion limit, Boeing has the potential to initiate additional rounds of capital raising if the initial $15 billion does not meet its financial needs.

The flexibility to raise up to $25 billion provides Boeing with a cushion as it navigates the lengthy recovery process, adjusting its strategy based on market demand and operational needs.

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Top Sources Related to Boeing News: Boeing Plans $15 Billion Capital Raise (For R&D)

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