Boeing launches $19B share sale to thwart downgrade

By Siddharth Philip and Julie Johnsson / Bloomberg

Boeing launched a nearly $19 billion share sale, one of the largest ever by a public company, to address the troubled planemaker’s liquidity needs and stave off a potential credit rating downgrade to junk.

The company offered to sell 90 million common shares and about $5 billion of depositary shares, according to a statement Monday.

The common-share portion alone would total just under $14 billion, based on Friday’s closing price of $155.01. That would be the largest share sale since SoftBank Group Corp. sold part of its stake in T-Mobile in 2020, data compiled by Bloomberg show.

As of noon Monday, Boeing shares had fallen just over 1% in U.S. trading.

With overallotments, the fundraising total could rise to about $21.8 billion, based on Bloomberg calculations.

The infusion of funds would clear one of new CEO Kelly Ortberg’s most urgent tasks. He is grappling with a balance sheet strained by years of turmoil and the fallout from a strike, now in its seventh week, that is crippling manufacturing of the company’s main cash cow, the 737 Max jetliner. Boeing needs the capital infusion to maintain its investment-grade rating and fund its production ramp-up once the walkout ends.

The company is on pace to use around $4 billion in cash during the fourth quarter, which would bring its free-cash outflow to around $14 billion for the year. The planemaker expects to continue burning cash through the first half of next year as it restarts its airplane 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 wage increase of 35% spread over four years. The company plans to cut its workforce by about 10%, Ortberg said in a memo to employees Oct. 11.

The company on Oct. 23 received clearance from the Securities and Exchange Commission to sell as much as $25 billion of equity and debt. Boeing also has a separate new credit agreement in place for $10 billion, giving it “additional short-term access to liquidity as we navigate through a challenging environment.”

Ortberg is also considering options to streamline Boeing’s broad portfolio. He has launched a review of its businesses that the CEO expects to conclude by year-end. The company is weighing options for the future of its troubled Starliner space capsule program as part of the review.

The underwriters have the option for an added 13.5 million common shares and $750 million in depositary shares to cover overallotments.

PJT Partners is acting as Boeing’s financial adviser for the offerings, the company said in the statement.

Goldman Sachs, BofA Securities, Citigroup and J.P. Morgan are acting as the lead joint bookrunning managers, while Wells Fargo Securities, BNP Paribas, Deutsche Bank Securities, Mizuho, Morgan Stanley, RBC Capital Markets and SMBC Nikko are acting as joint bookrunning managers.

With assistance from David Carnevali, Crystal Tse and Swetha Gopinath.