Boeing Company (NYSE:BA) shares are trading higher Wednesday. The company is reportedly closing in on a plan to raise approximately $15 billion through a combination of common stock and mandatory convertible bonds. Here's what you need to know.
What To Know: According to Reuters, Boeing plans to issue around $10 billion in new shares and $5 billion in mandatory convertible bonds, a hybrid bond that converts into equity at a predetermined date. The plane maker also filed regulatory documents indicating it could raise up to $25 billion in stock and debt.
The deal is expected to be priced following Boeing's third-quarter earnings report on Oct. 23. However, some analysts believe the company may delay the raise until its ongoing strike, which has been costing tens of millions of dollars per day, is resolved.
"The timing of any equity raise is still unclear but market consensus is that it should be done after the labor strike is resolved and earnings provide some visibility of its impact on current and future cash flows," said Michael Barr, senior research analyst at Neuberger Berman.
Boeing has faced regulatory scrutiny, production delays and customer confidence issues since a January incident in which a door panel blew off a 737 MAX midair. The company's shares have declined more than 40% year-to-date.
Additionally, Boeing has been burning through cash throughout 2024, leading to the decision to raise funds. The company also secured a $10 billion credit agreement with major lenders such as Bank of America, Citibank, Goldman Sachs and JPMorgan Inc.
Given Boeing's high debt load, the Reuters report indicates raising equity capital is seen as the company's only viable option to protect its credit rating. Rating agencies, including S&P, Moody's and Fitch, have warned that Boeing's credit rating could be downgraded to junk if the company raises additional debt without retiring $11 billion in debt due by February 2026.
BA Price Action: Boeing shares were up 1.53% at $154.69 at the time of writing, according to Benzinga Pro.
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