(Bloomberg) — Boeing Co. plans to launch a capital increase as early as Monday, according to people familiar with the matter, in an offering that would help the beleaguered aircraft maker boost its liquidity.
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The company plans to raise more than $15 billion from the fundraising, one of the people said, adding that the amount could still rise depending on demand. Boeing’s advisers have lined up potential investors for the offering, according to people familiar with the matter who asked not to be identified because the information is not public.
The transaction is likely to include both equity and debt that can be converted into equity, the people said.
The company received approval from the U.S. Securities and Exchange Commission on Oct. 23 to sell as much as $25 billion in stock and debt, a move that could help Boeing avoid having its credit rating downgraded to junk.
Deliberations are ongoing and details of the offer, such as the timing, could still change, the people said. A Boeing representative declined to comment.
A $15 billion share sale would be the largest stock offering since SoftBank Group Corp. in 2020 part of his stake in T-Mobile US Inc. sold, according to data collected by Bloomberg.
Boeing needs the capital injection to maintain its investment-grade rating and finance its eventual recovery from a crippling strike now in its seventh week. The company is on track to use about $4 billion of cash in the fourth quarter, which would bring free cash outflow for the year to about $14 billion. The planemaker expects to continue burning cash through the first half of next year as it restarts its aircraft factories, including the assembly lines for its cash cow 737 Max jetliner.
Boeing factory workers voted last week to reject the company’s latest contract offer, which included a 35% pay increase over four years. The company plans to reduce its workforce by about 10%, which may include cutting executives, managers and employees, CEO Kelly Ortberg said in a memo to employees on Oct. 11.
Boeing is considering raising at least $10 billion by selling new shares and is working with advisers to explore options, Bloomberg News reported earlier this month. Bank of America Corp. analyst Ronald Epstein estimated on Oct. 23 that the company would raise between $18 billion and $20 billion.
The company said on Oct. 15 that it has entered into a separate new credit agreement for $10 billion, giving it “additional short-term access to liquidity as we navigate a challenging environment.”
The Arlington, Virginia-based company reported third-quarter results on Oct. 23, with revenue of $17.8 billion beating expectations and the top two companies both reporting widening losses. Boeing shares are down more than 40% this year.
Boeing is considering options to streamline its broad portfolio. Ortberg has begun a review of his operations, which he expects to complete by the end of the year. The company is weighing options for the future of its troubled Starliner space capsule program as part of its review, Bloomberg News reports.
Reuters reported earlier this month that Boeing planned to raise about $15 billion through shares and convertible bonds.
–With help from Bailey Lipschultz.
(Updates with context from sixth paragraph.)
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