Boeing announces stock offering expected to raise up to $19 billion / Photo: © AFP/File
Boeing announces stock offering expected to raise up to $19 billion
Boeing announced a stock offering on Monday expected to raise up to $19 billion, saying proceeds will go towards repaying debt and investing in its subsidiaries.
The aviation giant, which last week reported a whopping $6.2 billion quarterly loss, has been suffering from a strike by some 33,000 US workers that has paralyzed two major plants since mid-September.
"Boeing intends to use the net proceeds from the offerings for general corporate purposes," the company said in a statement.
These include, "repayment of debt, additions to working capital, capital expenditures, and funding and investments in the company's subsidiaries," it added.
Boeing announced an offer to sell 90 million shares of common stock -- valued at around $13.9 billion at current market prices -- in addition to $5 billion in depositary shares.
The company's shares were down in premarket trading on Monday after the share sale was announced.
Boeing has been struggling with a string of problems in recent years, prompting the departure of its old chief executive, who was replaced in August by aerospace veteran Kelly Ortberg.
The 64-year-old said earlier this week that he was reviewing company operations with an eye towards narrowing Boeing's profile.
Boeing is better off "doing less and doing it better than doing more and not doing it well," Ortberg said Wednesday during an earnings conference call with analysts.
Since Ortberg's arrival, the company has announced measures to strengthen its cash position including a 10 percent reduction in its global workforce, amounting to around 17,000 positions cut.
It is also considering the possible sale of its space business, which includes its problem-plagued Starliner vehicle, according to a report in the Wall Street Journal on Friday.
Meanwhile, the strike by Boeing workers has trundled on after union members rejected a new contract offer on Wednesday.
Almost two-thirds (64 percent) of the members of the International Association of Machinists and Aerospace Workers District 751 rejected the preliminary agreement, extending the walkout of thousands of Seattle-region employees.
The latest Boeing contract offer included a 35 percent pay rise over four years and a one-time signing bonus of $7,000. However, the deal did not restore a company pension, a major sticking point for older workers.
Many union members view the negotiations as a payback after concessions in earlier rounds, including a 2014 agreement that eliminated the pension.
But Boeing views restoring the pension as a non-starter because of the cost burden involved.
The strike has halted activity at two factories that assemble the 737 MAX and 777, costing an estimated $7.6 billion in direct losses -- including at least $4.35 billion for Boeing and almost $2 billion for its suppliers, according to the Anderson Economic Group consultancy.
(V.Sørensen--DTZ)
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