The American aircraft industry giant is seeking to raise more than $19 billion in financing, with expectations that the amount will increase if demand increases. Last week, the company obtained approval from the US Securities and Exchange Commission to sell up to $25 billion in stocks and debt.
The company will offer 90 million common shares and $5 billion in convertible shares.
The move will boost the company’s faltering finances Boeingwhich has worsened since about 33,000 of its workers went on strike, halting production of models including the 737 MAX.
The planemaker was already suffering from a regulatory cap on Max aircraft production after January.
The capital increase is primarily aimed at maintaining Boeing’s credit rating. Rating agencies have warned that a prolonged strike could lead to a downgrade of Boeing’s credit rating, which would likely lead to a higher cost of capital.
The company announced a loss of $6 billion in the third quarter due to problems in… Employment And production problems.
The strike is costing the company more than $1 billion a month, according to an estimate released before Boeing announced it would cut 10 percent of its workforce.
Boeing plant workers voted last week to reject the company’s latest offer, which included a 35% pay increase over four years. The company plans to reduce its workforce by about 10 percent, with cuts likely to include executives, directors and employees, CEO Kelly Ortberg said in an October 11 memo to employees.
Earlier this month, Boeing entered into a $10 billion credit agreement with banks and announced plans to raise up to $25 billion through equity and debt offerings.
S&P Global warned of downgrading the company below its target cash balance of $10 billion if the company is forced to increase leverage to meet debt maturities.
Boeing was considering raising at least $10 billion through the sale of new shares, and was working with advisers to explore its options, Bloomberg News reported earlier this month. Bank of America analyst Ronald Epstein estimated on October 23 that the company would raise between $18 billion and $20 billion.
