ARLINGTON, Va. - The Boeing Company (NYSE:BA) [NYSE: BA] has announced the pricing of its concurrent public offerings of common stock and depositary shares, potentially raising about $20 billion. The aerospace giant priced 112.5 million shares of common stock at $143 each and $5 billion worth of depositary shares at $50 per depositary share. The offerings, which are subject to customary closing conditions, are expected to close at the end of October.
The net proceeds from the common stock offering are estimated at approximately $15.81 billion, and from the depositary shares offering at about $4.91 billion, after underwriting discounts and estimated offering expenses. Boeing plans to use the funds for general corporate purposes, including debt repayment, working capital, capital expenditures, and investments in subsidiaries.
Depositary shares represent a 1/20th interest in Boeing's newly issued 6.00% Series A Mandatory Convertible Preferred Stock. Holders of these shares will have rights and preferences proportional to the preferred stock, including conversion, dividend, liquidation, and voting rights, under the terms of a deposit agreement. The preferred stock will pay an annual dividend of 6.00%, with the first payment expected on January 15, 2025. Unless converted earlier, the preferred stock will automatically convert into common stock on or about October 15, 2027, with the conversion rate based on the common stock's average price preceding this date.
Boeing has applied to list the depositary shares on the New York Stock Exchange under the symbol "BA-PRA." Leading the offerings are Goldman Sachs (NYSE:GS) & Co. LLC, BofA Securities, Citigroup, and J.P. Morgan, with several other financial institutions participating as joint bookrunners and co-managers.
This announcement follows a registration statement filed with the Securities and Exchange Commission, which has become effective. The offerings are only available through a prospectus supplement and accompanying prospectus, which interested parties can obtain from the SEC's website or directly from the managing financial institutions.
The press release clarified that this announcement does not constitute an offer to sell or a solicitation of an offer to buy these securities. It also contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ significantly from expectations.
This news article is based on a press release statement from The Boeing Company.
In other recent news, Boeing Co . has been actively maneuvering to address its financial challenges. The company has initiated a capital raising strategy, aiming to secure over $15 billion through the sale of common shares and mandatory convertible bonds. This move is a response to financial pressures exacerbated by an ongoing strike disrupting production. Additionally, Boeing has expressed intentions to sell its space business, including its NASA-related operations.
On the labor front, Boeing employees are seeking the reinstatement of traditional pension plans. The company's resistance to this move is driven by a need to control long-term pension liabilities. These developments reflect Boeing's response to the complex challenges it faces, guided by a consortium of financial institutions, including Goldman Sachs & Co. LLC, BofA Securities, Citigroup, and J.P. Morgan.
In other developments, LATAM Airlines (NYSE:LTM) Group has expanded its fleet with an order for 10 Boeing 787-9 Dreamliners, highlighting the group's commitment to more fuel-efficient planes. This purchase aligns with LATAM's strategy to grow sustainably while reducing its environmental impact. The airline expects to receive at least two aircraft annually from 2025 until the end of the decade. These are recent developments in the company's operations and financial strategies.
InvestingPro Insights
Boeing's recent move to raise approximately $20 billion through public offerings of common stock and depositary shares comes at a critical time for the aerospace giant. According to InvestingPro data, Boeing's financial position has been challenging, with a market capitalization of $106.72 billion and a negative P/E ratio of -11.71, indicating recent unprofitability.
The company's decision to raise capital aligns with several InvestingPro Tips. For instance, one tip notes that Boeing "May have trouble making interest payments on debt," which explains the company's urgency in securing additional funds. Another tip points out that Boeing is "Not profitable over the last twelve months," further underlining the need for this capital infusion.
The offering price of $143 per share for common stock is particularly interesting when compared to the InvestingPro Fair Value estimate of $127.27, suggesting that Boeing may be capitalizing on a potentially overvalued stock price. This move could be strategic, especially considering that the stock has been "Trading near 52-week low" and has experienced a significant price drop over the last three months, as indicated by another InvestingPro Tip.
Boeing's plan to use the proceeds for debt repayment and working capital is crucial, given that the company's revenue for the last twelve months stood at $73.29 billion, with a concerning revenue growth of -3.25%. The negative operating income of -$5.8 billion further emphasizes the importance of this capital raise for Boeing's financial health.
Investors considering Boeing's stock should note that there are 11 additional InvestingPro Tips available, offering a more comprehensive analysis of the company's financial situation and market position. These insights could prove valuable in understanding the full implications of Boeing's recent capital-raising efforts.
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