ALBAWABA - In an effort to stabilize its finances as it deals with the financial effect of a prolonged labor strike, Boeing has announced that it would be selling shares on Monday with the intent of raising $19 billion.
The aerospace enterprise, which is currently struggling with quality control issues, regulatory scrutiny after two tragic incidents involving its 737 Max aircraft, a quarterly loss of $6.1 billion and is potentially facing a fall in its credit rating, is working to improve its liquidity while simultaneously addressing its debt and addressing its operational issues, AFP reports.
A strike by 33,000 machinists has made matters worse by halting output at two major plants and adding to the financial burden. The strike started after union members turned down a deal that promised a signing bonus and a 35% salary hike but did not reinstate a pension plan.
Boeing and its suppliers have reportedly already lost $7.6 billion as a result of the prolonged strike, according to AFP, with the costs still rising.
The troubled behemoth plans to issue around 90 million shares of common stock, which is expected to generate about $13.9 billion at current market prices, in addition to an additional $5 billion from depositary shares. Should the offering be oversubscribed, Boeing has the possibility to sell additional securities with a value of up to $3 billion, bringing the possible proceeds to a total of $22 billion.
The company currently has around $58 billion worth of debt, according to the New York Times. Depending on how long the strike continues, S&P Global Ratings has said that it is considering reducing Boeing's credit rating to "junk" status.
Raising money is meant to prevent such possible deterioration in the company's credit rating, which would increase the cost of borrowing money. Boeing aims to use the funds generated to cover for its operational costs, debt reduction, and investments in all of its companies.
