Boeing said Tuesday that it could raise as much as $25 billion in shares or debt over three years, a move to increase liquidity as the troubled manufacturer faces a more than monthlong machinist strike and problems throughout its aircraft programs.<\/p>\n
\u201cThis universal shelf registration provides flexibility for the company to seek a variety of capital options as needed to support the company\u2019s balance sheet over a three year period,\u201d Boeing said in a statement.<\/p>\n
Boeing shares are down nearly 42% this year as of Tuesday.<\/p>\n
Bank of America aerospace analysts have estimated that Boeing will raise between $10 billion and $15 billion in equity.<\/p>\n
\u201cWe expect Boeing to offer equity first, which should shore up the company\u2019s balance sheet in the near term while maintaining the option to later issue equity debt with a lower risk of a credit downgrade,\u201d BoFA analyst Ron Epstein wrote Tuesday.<\/p>\n
Fitch Ratings said Boeing\u2019s announcement Tuesday will \u201cincrease financial flexibility and moderate near-term liquidity concerns.\u201d<\/p>\n
Boeing is trying to shore up its balance sheet as it faces warnings from credit ratings agencies that it could lose its investment-grade rating.<\/p>\n
S&P Global Ratings, one of the agencies that warned about a downgrade, last week estimated that the machinist strike is costing Boeing more than $1 billion a month. The two sides have been at an impasse.<\/p>\n
Earlier, Boeing separately said in a filing that it has an agreement with a consortium of banks for a $10 billion credit agreement.<\/p>\n
\u201cThe credit facility provides additional short term access to liquidity as we navigate through a challenging environment,\u201d the company said in a statement. \u201cThe company has not drawn on this facility or its existing credit revolver.\u201d<\/p>\n
On Friday, Boeing\u2019s new CEO, Kelly Ortberg, warned that the company plans to lay off about 17,000 employees, or 10% of its global workforce to cut costs.<\/p>\n
\u201cWe need to be clear-eyed about the work we face and realistic about the time it will take to achieve key milestones on the path to recovery,\u201d he said, adding that Boeing needs to focus resources on \u201careas that are core to who we are.\u201d<\/p>\n
The announcement came alongside preliminary financial results, showing mounting losses and $5 billion in charges in Boeing\u2019s defense and commercial airplane units.<\/p>\n
On Oct. 23, Ortberg will hold his first quarterly investor call since becoming Boeing\u2019s CEO in August.<\/p>\n<\/p>\n
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