Boeing on Tuesday announced it will raise about $21 billion through a public offer and depositary shares, outpacing the $19 billion it initially planned to raise with its Monday announcement. The Boeing stock slid early on Tuesday.
Boeing on Tuesday hiked its offering to 112.5 million shares of common stock, up from 90 million it announced on Monday, as well as $5 billion worth of depositary shares.
Boeing priced its stock offering at $143 per share to raise $15.81 billion, a 7.75 per cent discount to its close on Friday. The depositary share offering raised $4.9 billion.
The stock offering will help the plane maker strengthen its finances, which have been squeezed by an over-a-month-long strike by its workers, and preserve its investment-grade credit rating.
The company intends to use the funds to cover general corporate purposes, repay debt, increase working capital and expenditure, as well as fund and invest in Boeing’s subsidiaries.
The move will boost Boeing’s battered finances, which have worsened since roughly 33,000 of its workers, represented by the machinists union, walked off their jobs in September, halting production of models, including its cash-cow 737 MAX aircraft.
“The offering is certainly favourable for credit quality. We’ll factor it into our assessment of the rating in the context of continued negative free cash flow,” said Ben Tsocanos, aerospace director at S&P Global Ratings.
Boeing has never fallen below the investment-grade rating.
Goldman Sachs & Co. LLC, BofA Securities, Citigroup and J.P. Morgan are acting as lead joint bookrunning managers for the offerings.
Reuters
