More than the initial suggestion of about $19 billion, the Boeing Co. said Tuesday that it will raise almost $21 billion through public sales of common stock and depositary shares. This is in addition to the capital raise that was announced on Monday.
The aircraft company BA -2.79% increased the size of the deal from 90 million shares of common stock to 112.5 million shares of common stock and $5 billion worth of depositary shares, each of which represents one-twentieth of a share in newly issued convertible preferred stock.
It cost $143 a share to sell the stock, which brought in $15.81 billion, and it cost $4.9 billion to sell the depositary stock.
The money will be used for general business reasons, such as paying off debt, keeping up with expenses, making capital purchases, and giving money to the company’s subsidiaries.
Boeing owes more than $57 billion in debt, and bondholders were happy to hear on Monday that the company would be raising money.
The move comes at a time when Boeing is having a lot of problems. For example, its machinists are continuing a strike that began on September 13. The business has said it will let people go, and last week, the Wall Street Journal said Boeing was thinking about selling its space business as another way to deal with its operational problems and get money.
All three rating agencies have the company’s credit at the lowest level of investment grade, which makes it hard for the company to keep its investment-grade ranking. Because buyers can only hold investment-grade paper, a cut to junk would make interest rates go up and keep the company from getting money from more investors.
After a door panel fell off an Alaska Airlines 737 MAX during a flight in January, the company was the subject of several government investigations.
The company said last week that it had lost $6 billion in the third quarter and used up another $2 billion in cash.
“It will take time to bring Boeing back to its former glory, but with the right focus and culture, we can be an iconic company and an aerospace leader again,” Kelly Ortberg, the company’s new CEO, said in prepared comments.
Boeing also increased the number of extra shares of common stock it offered to buyers on Tuesday from 13.5 million to 16.9 million. To make up for over-allotments, underwriters can also buy an extra $750 million worth of depositary shares. If that is used, it could bring in an extra $3.2 billion.
The stock was down 0.6% before the market opened. It has lost more than 40% so far this year, while the S&P 500 SPX 0.27% has gained 22%.
