Boeing on Monday launched dual stock offerings that could raise nearly $19 billion as it battles mounting financial pressures amid growing losses.
The beleaguered aerospace giant plans to sell 90 million shares of common stock and $5 billion in depositary shares, each representing a stake in newly issued Series A mandatory convertible preferred stock. Based on last week's closing price, Boeing can raise more than $13.95 billion from the common stock offering.
Boeing’s stock was trading 1.88 per cent down at $152.10 a share at 6pm UAE time (10am New York time) on Monday, giving the company market capitalisation of $93.87 billion. The stock is down 38.43 per cent since the start of the year.
Boeing said the nominal or face value of each common stock is set at $5. The move includes an additional 30-day option for underwriters to purchase an extra 13.5 million of common shares and $750 million in depositary shares to address over-allotments, if any.
Boeing said it aims to use the net proceeds from the offerings towards general corporate needs, potentially covering working capital, debt repayment, capital expenditures, and investments across its subsidiaries.
Lead bookrunning managers for the offerings include financial companies Goldman Sachs, BofA Securities, Citigroup, and JP Morgan, among others.
Holders of the depositary shares will receive a portion of the preferred stock's rights, such as dividends, voting power, and the option to convert shares, based on the terms in a deposit agreement, Boeing said.
The company said it intends to apply to list the depositary shares on the New York Stock Exchange under the symbol “BA.PRA”.
“The preferred stock is expected to have a liquidation preference of $1,000 per share,” Boeing said.
Each share of preferred stock, unless converted earlier, will automatically switch to common stock by October 15, 2027, with the number of shares depending on a set conversion rate. Similarly, each depositary share will convert into a proportionate fractional amount of common stock.
Earlier this month, Boeing entered into a $10 billion credit agreement with banks and said it plans to raise up to $25 billion through stock and debt offerings as it seeks to shore up its balance sheet.
Boeing is dealing with a series of crises related to the safety of its aircraft and its manufacturing process.
On October 8, the US aviation regulator issued a safety alert to airlines, warning of potential risks related to restricted or jammed rudder movement on certain Boeing 737 aircraft.
Last week, Boeing’s new chief executive Kelly Ortberg unveiled a four-point strategy to turn around the troubled US plane maker's fortunes after its losses nearly quadrupled to more than $6 billion in the third quarter.
It reported a net loss of more than $6.17 billion in the three months to the end of September, expanding from $1.64 billion loss in the corresponding period last year. Revenue dropped about 1.5 per cent on a yearly basis to $17.84 billion.
The company’s factory workers also rejected a new labour contract that would have increased their wages by 35 per cent over four years. The company’s hourly workers are demanding a 40 per cent pay increase and improved retirement benefits, fuelled by frustration over modest wage hikes over the past decade, while top executives received substantial compensation.
