Boeing launches a $19 billion stock offering to meet liquidity needs and prevent credit rating downgrade

To address the liquidity crisis and avoid credit ratings being downgraded to junk status, Boeing has launched one of the largest stock sales plans in the history of global listed companies.

Boeing announced on Monday that it will issue 90 million common shares and approximately $5 billion worth of depositary shares.

Based on the closing price of $155.01 last Friday, these common shares are valued at nearly $14 billion. Including the depositary shares, the total sales amount will reach $19 billion. According to data compiled by Bloomberg, this will be the largest stock sale action since SoftBank reduced its stake in T-Mobile US in 2020 (raising $20.12 billion).

According to Bloomberg's calculations, if there is oversubscription, Boeing's total fundraising amount for this round may increase to around $21.8 billion. Underwriters may choose to sell an additional 13.5 million common shares and $750 million worth of depositary shares.

After the news was announced, Boeing's U.S. stock rose in pre-market trading, but by the time of writing, it had given back all gains and dropped nearly 2%. Due to frequent safety issues, large-scale strikes by workers that have yet to end, and the staggering losses so far this year, Boeing's stock price has plummeted by nearly 40% this year.

Top Priority - Addressing the Liquidity Crisis

It is widely believed that addressing the liquidity crisis is Boeing's top priority.

The strike has now entered its seventh week, leading to a halt in production of Boeing's flagship product, the 737 Max jet. Boeing needs funding to accelerate its production once the strike ends. The aircraft manufacturing giant expects that as its aircraft factories restart, including the assembly line for the 737 Max jet, it will continue to burn cash in the first half of next year.

Boeing also needs to inject funds to maintain its investment-grade rating. The three major international rating agencies - Standard & Poor's, Moody's, and Fitch - have all warned that if Boeing continues to finance new debt without being able to repay the approximately $11 billion debt due on February 1, 2026, its credit rating will be downgraded to junk status.

In addition, Boeing factory workers rejected the company's latest proposal last week, including a 35% wage increase over four years. CEO Kelly Ortberg stated in a memo to employees on October 11 that Boeing plans to lay off about 10% of its workforce.

Boeing expects to use approximately $4 billion in cash in the fourth quarter, bringing its full-year free cash flow outflow to $14 billion.

On October 23, Boeing received approval from the U.S. Securities and Exchange Commission (SEC) to sell up to $25 billion in stocks and debt. Boeing also signed a new $10 billion credit agreement to "obtain more short-term liquidity in a challenging environment."

Ortberg is also considering streamlining Boeing's extensive investment portfolio. He has initiated an evaluation of Boeing's business, which is expected to be completed by the end of the year. According to a previous article by Wall Street News With keyword=波音 mentioned, Boeing is considering selling its famous NASA business, including the Starliner spacecraft and operations supporting the International Space Station.

Regarding the details of this sale, Boeing stated that PJT Partners will serve as financial advisor. Goldman Sachs, Bank of America, Citigroup, and JP Morgan will act as joint lead bookrunners, while Wells Fargo, BNP Paribas, Deutsche Bank, Mizuho, Morgan Stanley, RBC Capital Markets, and SMBC Nikko will serve as joint bookrunners