The aerospace firm has received pitches from investment banks, including Goldman Sachs, JPMorgan, Bank of America and Citigroup according to four sources familiar with the matter reports Shankar Ramakrishnan, Allison Lampert, Echo Wang and Mike Stone Reuters.
These options include selling common stock as well as securities such as mandatory convertible bonds and preferred equity, according to the sources. One of the sources said they suggested to Boeing that it should raise around $10 billion.
Such hybrid bonds can be treated as equity capital by rating agencies, which means issuing them would not add to debt to the same extent as selling bonds, while also being potentially more favourable for existing shareholders.
Banks have also been building so-called shadow books, sounding out interest from investors for such securities in case Boeing decided to go ahead, the sources said. Some investors have reached out to banks to tell them they were interested in purchasing Boeing’s preferred securities if they were issued, two of the sources said.
Boeing and the investment banks declined to comment. The sources, who requested anonymity as these conversations are private, said Boeing had not decided whether to go ahead with any of these options. It was not clear when it might make a decision.
The company has about $60 billion in debt and posted operating cash flow losses of more than $7 billion for the first half of 2024. Moody’s is reviewing the option to downgrade to junk status and S&P said on Tuesday it placed Boeing's rating on CreditWatch negative, saying the planemaker will likely require incremental funding.
In an attack on the union and the 33,000+ striking workers, the company has withdrawn its pay offer and conditions and walked away from talks. The walkout, now in its fourth week, is said to be costing the firm about $1 billion a month.
There are some doubting Boeing's intentions, the firm, they say, has previously used such underhand measures to selectively brief media to an over-exaggerated worsening financial position to force employees back to work on worse conditions an pay, fearing the company would enter bankruptcy protection again. "Boeing are all about misleading and obfuscating" a UK-based employee stated.
Earlier this year, Boeing replaced its CEO Dave Calhoun with Kelly Ortberg, who started in August with the hope of pulling together a labour deal and shore up the company's reputation with customers and regulators. So far, none of that has happened and the reputation continues to tumble.
