Boeing hones $15-billion financing plan to weather crises, sources say
Boeing plans to raise $15 billion via stock and hybrid bonds
Company faces regulatory scrutiny, production curbs and customer confidence loss
Planemaker's investment-grade rating is in peril
Recasts first paragraph, updates share price, adds byline, changes headline
By Shankar Ramakrishnan, Echo Wang and Tim Hepher
Oct 16 (Reuters) -Boeing BA.N is closing in on a plan to raise around $15 billion with common shares and a mandatory convertible bond as the jetmaker bolsters finances worsened by a crippling strike, but the timing remains unclear, four sources familiar with the matter told Reuters.
The company said on Tuesday in regulatory filings that it could raise as much as $25 billion in stock and debt with its investment-grade credit rating at risk. One of the sources cautioned that a $15-billion sale may not be enough for Boeing to address its ongoing crises.
The aerospace giant has been dealing with increased regulatory scrutiny, production curbs and a loss of confidence from customers since a door panel blew off a 737 MAX plane in midair in early January. Shares gained 1% on Wednesday, but are down more than 40% this year.
Boeing has been burning through cash all year, leading to its Tuesday announcements that it will raise money in the capital markets and that it had also secured a $10-billion credit agreement with major lenders: Bank of America BAC.N, Citibank C.N, Goldman Sachs GS.N and JPMorgan JPM.N.
Boeing declined to comment.
Four investor and banking sources said representatives from those lenders were inquiring about appetite for a combined offering of new shares and a mandatory convertible bond – a hybrid bond that could convert into equity on or before a predetermined date.
Roughly $10 billion in new shares are being contemplated to be sold by the company along with nearly $5 billion in mandatory convertible bonds, the sources said.
One of the four sources said the deal was scheduled to be priced shortly after Boeing's Oct. 23 third-quarter earnings report. But another investor source said the company was trying to avoid a raise during the month-old strike which analysts estimate is costing tens of millions of dollars per day.
“The timing of any equity raise is still unclear but market consensus is that it should be done after the labor strike is resolved and earnings provide some visibility of its impact on current and future cash flows," said Michael Barr, senior research analyst at Neuberger Berman.
While Boeing burned less free cash than expected during the third quarter, the planemaker may have no choice but to act before the end of the strike to protect its investment-grade rating, two of the sources said.
Boeing shares have rallied since its refunding announcement, suggesting some investors think the trough has been reached.
One investor source said a three-year mandatory convertible bond paying 7% to 8% in annual coupon that could convert into shares at a premium of 20% over the current share price could attract strong demand.
The funding is expected to soften the blow for existing shareholders whose equity ownership could decline when a company issues new shares.
A mandatory convertible option was being pursued because such hybrid bonds can be treated as equity capital by rating agencies, which means issuing them would not add to debt to the same extent as selling bonds. They are friendlier to existing shareholders, as stock conversion is a couple of years away and at a premium.
Raising equity capital is the only funding option for debt-laden Boeing which is intent on protecting its investment-grade ratings.
The top three rating agencies – S&P, Moody’s and Fitch – have warned they will cut Boeing’s ratings to junk if it raised new debt without retiring some $11 billion of debt maturing through Feb. 1, 2026.
Boeing's Year of Woe https://tmsnrt.rs/4dKUQkh
Reporting by Shankar Ramakrishnan and Echo Wang in New York, Tim Hepher in Paris and Allison Lampert in Montreal
Editing by David Gaffen, Matthew Lewis and Rod Nickel
Actifs liés
Dernières actualités
Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.
Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.
Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.
