ARLINGTON, Va. - The Boeing Company (NYSE:BA) [NYSE: BA] today announced the initiation of two separate underwritten public offerings, comprising 90 million shares of common stock and $5 billion in depositary shares, each representing a fractional interest in a share of newly issued Series A Mandatory Convertible Preferred Stock. The aerospace giant also plans to offer the underwriters a 30-day option to purchase additional shares and depositary shares to cover any over-allotments.
These offerings are intended to bolster Boeing's financial flexibility, with the proceeds slated for a range of corporate uses, including debt repayment, working capital enhancement, capital expenditures, and investments in its subsidiaries. The Preferred Stock carries a liquidation preference of $1,000 per share and will automatically convert into a variable number of common shares on or about October 15, 2027, unless converted earlier.
Boeing has expressed its intention to list the depositary shares on the New York Stock Exchange under the symbol "BA.PRA." There is currently no public market for these securities.
A consortium of financial institutions, including Goldman Sachs (NYSE:GS) & Co. LLC, BofA Securities, Citigroup, and J.P. Morgan, are leading the offerings as joint bookrunning managers. Other banks, such as Wells Fargo (NYSE:WFC) Securities and Morgan Stanley (NYSE:MS), are also participating in the offerings. PJT Partners (NYSE:PJT) is serving as Boeing's financial advisor for these transactions.
This announcement follows the effective registration of these securities with the Securities and Exchange Commission (SEC). Interested parties can obtain copies of the preliminary prospectus supplements and accompanying prospectuses from the SEC's website or directly from the managing banks.
It's important to note that this press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, and actual outcomes may vary due to numerous factors, including but not limited to economic conditions, industry regulations, customer relationships, production issues, and the successful integration of acquisitions like Spirit AeroSystems (NYSE:SPR) Holdings, Inc.
This news article is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy these securities, nor does it constitute an offer, solicitation, or sale in any jurisdiction where such activities are unlawful.
In other recent news, Boeing has been facing a series of challenges. Employees are seeking the reinstatement of traditional pension plans, a move that could strain the company's financial condition. Boeing's resistance to reverting to the previous pension structure is driven by a need to control long-term pension liabilities.
On another note, Boeing is initiating a capital raising strategy to secure over $15 billion in response to financial pressures exacerbated by an ongoing strike. The company is looking to generate funds through the sale of common shares and mandatory convertible bonds. This move follows a near two-to-one vote by machinists to reject Boeing's offer aimed at resolving the strike.
In addition, Boeing is considering the sale of its space business, including its NASA-related operations. This potential divestment comes as the aerospace industry faces both challenges and opportunities in the burgeoning space sector. However, no official statement has been provided by Boeing in response to inquiries about the potential sale.
Moreover, the ongoing strike by over 33,000 Boeing workers has led to significant operational challenges for aerospace suppliers, including potential job cuts and reduced production schedules. The strike's continuation threatens further job cuts and investment freezes among Boeing's suppliers.
Lastly, in response to potential threats from China's hypersonic weapons, the US Navy is advancing plans to arm its ships with Patriot interceptor missiles. This move is seen as a strategic anticipation of advancements in Chinese missile capabilities. The United States has partnered with Japan for joint production of Patriot missiles and is looking to establish a new production line for missile seekers in Florida, complementing Boeing's existing manufacturing.
InvestingPro Insights
Boeing's decision to initiate public offerings of common stock and preferred shares comes at a critical time for the aerospace giant. According to InvestingPro data, Boeing's market capitalization stands at $95.83 billion, reflecting its significant position in the industry. However, the company faces several challenges that these offerings aim to address.
InvestingPro Tips highlight that Boeing "may have trouble making interest payments on debt" and "suffers from weak gross profit margins." These insights align with the company's stated intention to use the offering proceeds for debt repayment and working capital enhancement. The gross profit margin for the last twelve months as of Q3 2023 was a mere 3.62%, underscoring the need for financial reinforcement.
Moreover, Boeing's revenue for the same period was $73.29 billion, with a concerning revenue growth of -3.25%. This decline is consistent with another InvestingPro Tip indicating that "analysts anticipate sales decline in the current year." The public offerings could provide Boeing with the financial flexibility to navigate these headwinds and potentially reverse the negative trend.
It's worth noting that Boeing's stock has been under pressure, with InvestingPro data showing a three-month price total return of -17.06%. This context makes the timing of the offerings particularly significant as the company seeks to strengthen its financial position.
For investors considering Boeing's stock, it's important to be aware that InvestingPro lists 11 additional tips that could provide further insights into the company's financial health and market position. These additional tips, available with an InvestingPro subscription, could offer valuable context for understanding the potential impact of these public offerings on Boeing's future performance.
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