Boeing Co. (BA, Financial) said in a statement Tuesday that it is offering equity and debt, as well as new credit agreements, to address its increasingly precarious position, exacerbated by continued production problems and costly union strikes. The company said it is aiming to issue up to $35 billion through the transaction. Bank of America (BOFA Financial), Citibank, Goldman Sachs (GS, Financial), and JPMorgan (JPM, Financial) join the aerospace giant with up to $25 billion in market financing and $10 billion in It is expected to provide financing facilities. The financial strategy follows an ongoing in-house effort by 33,000 union members that has caused Boeing to lose about $1 billion a month from production line problems that have shut down several times thanks to regulatory investigations into safety issues. It comes at a time when we are facing multiple crises leading up to the strike. The company is also at risk of having its credit rating downgraded by credit rating agencies, with its rating near junk status. But Boeing is under pressure on all fronts, and market participants appreciate the fact that the company is keen to protect itself, even though the company’s stock price rose 2.1% after the announcement. .
Standard & Poor’s and Fitch last month agreed that the new liquidity could be used to support Boeing’s investment-grade rating, although they highlighted the risk of a downgrade. Most of them are still approaching the situation cautiously. But some have specifically criticized Boeing’s efforts, saying they are “vague and, more importantly, appear to be difficult to obtain decent funding.” The expected funding is intended to shore up Boeing’s balance sheet and provide it with hidden cash to support its operations in what is likely to be a highly volatile environment. Although no new credit facilities were drawn up during the year, the group said it provided a good buffer against these continued pressures.
This article first appeared on GuruFocus.
