Boeing [NYSE: BA] has announced the launch of concurrent, separate underwritten public offerings, presenting a significant opportunity for investors. This move involves the offering of 90,000,000 shares of common stock and $5 billion of depositary shares, each representing a fractional interest in newly issued Series A Mandatory Convertible Preferred Stock. This article provides a comprehensive comparison of these offerings, helping investors understand the details and potential implications.
Boeing, officially The Boeing Company, indicated that underwriters will be granted a 30-day option to purchase additional shares – up to 13,500,000 shares of common stock and $750 million of depositary shares – solely to cover over-allotments, if any. The company plans to utilize the net proceeds from these offerings for general corporate purposes. These purposes are broad, potentially including debt repayment, bolstering working capital, capital expenditures, and strategic investments in Boeing’s subsidiaries.
For investors considering the depositary shares, it’s crucial to understand their structure. Holders will possess a proportional fractional interest in the rights and preferences associated with the Preferred Stock. These rights encompass conversion, dividend, liquidation, and voting rights, all governed by a deposit agreement. Each share of Preferred Stock is expected to carry a liquidation preference of $1,000.
The conversion mechanism is set for around October 15, 2027. Unless converted earlier, each Preferred Stock share will automatically convert into a variable number of common stock shares, determined by an applicable conversion rate at that time. Similarly, each depositary share will convert into a proportionate fractional interest of common stock shares. The specifics of the dividend rate, conversion terms, and other conditions for the Preferred Stock will be finalized at the time of pricing the depositary share offering. Currently, there is no established public market for either the depositary shares or the Preferred Stock. However, Boeing intends to list the depositary shares on the New York Stock Exchange under the ticker symbol “BA.PRA.”
Understanding Boeing’s concurrent stock offerings.
Leading financial institutions are playing key roles in these offerings. Goldman Sachs & Co. LLC, BofA Securities, Citigroup, and J.P. Morgan are the lead joint bookrunning managers. Joining them as joint bookrunning managers are Wells Fargo Securities, BNP PARIBAS, Deutsche Bank Securities, Mizuho, Morgan Stanley, RBC Capital Markets, and SMBC Nikko. PJT Partners is serving as Boeing’s financial advisor for these offerings.
Investors seeking further details can access the registration statement on Form S-3, which has been filed with the Securities and Exchange Commission (SEC) and is now effective. The offerings will be made exclusively through a prospectus supplement and accompanying prospectus. These documents are available on the SEC’s website at http://www.sec.gov. For direct inquiries and to obtain copies of the preliminary prospectus supplements and accompanying prospectuses, investors can contact the bookrunning managers directly. Contact information is provided for Goldman Sachs & Co. LLC, BofA Securities, Citigroup, and J.P. Morgan Securities LLC, facilitating direct access to offering details.
It is important to note that this announcement is not a direct offer to sell or a solicitation to buy these securities. Furthermore, it does not constitute an offer, solicitation, or sale in any jurisdiction where such actions would be unlawful.
Forward-Looking Statements and Risk Considerations
This announcement includes forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995. These statements are identifiable by terms like “may,” “should,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates,” and similar expressions. Examples within this announcement include statements about the stock and depositary share offerings, the anticipated timeline for completion, the intended use of net proceeds, and any statements not directly related to historical or current facts.
Boeing’s commercial airplanes are a key part of their business and market.
These forward-looking statements are based on current expectations and assumptions, which are inherently subject to risks, uncertainties, and unpredictable changes. Numerous factors could cause actual results to deviate materially and adversely from these projections. These risk factors include, but are not limited to:
- General economic and industry conditions, including regulatory changes.
- Reliance on commercial airline customers and the health of the airline industry.
- Aircraft production system health, production quality, and rates.
- Successful development and certification of new aircraft.
- Ability of aircraft to meet performance and reliability standards.
- The pending acquisition of Spirit AeroSystems Holdings, Inc., and its completion.
- Government budget and appropriation levels, especially U.S. government spending.
- Dependence on subcontractors and suppliers, and availability of skilled labor and materials.
- Potential for work stoppages or labor disruptions.
- Competition within Boeing’s markets.
- Risks associated with non-U.S. operations and international sales.
- Changes in accounting estimates.
- Realization of benefits from mergers, acquisitions, and strategic alliances, including the Spirit AeroSystems acquisition.
- Dependence on U.S. government contracts.
- Reliance on fixed-price and cost-type contracts.
- Contracts with in-orbit incentive payments.
- Cybersecurity risks and unauthorized access to sensitive information.
- Business disruptions from various threats, including natural disasters and pandemics.
- Potential adverse outcomes from litigation, government inquiries, or investigations.
- Environmental liabilities and climate change effects.
- Credit rating agency actions and access to debt financing.
- Pension and postretirement benefit obligations.
- Adequacy of insurance coverage.
- Customer and aircraft concentration in the financing portfolio.
For a more detailed understanding of these risks and other factors, investors are encouraged to review Boeing’s filings with the Securities and Exchange Commission, including their most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Boeing explicitly states no obligation to update or revise any forward-looking statements, whether due to new information, future events, or other factors, except as legally required.
In Conclusion: Analyzing Boeing’s Financial Move
Boeing’s concurrent offerings of common stock and depositary shares represent a significant financial maneuver. For investors, understanding the nuances of each offering – common stock versus depositary shares representing preferred stock – is crucial. The depositary shares, with their convertible preferred stock underpinnings, offer a different risk-reward profile compared to common stock. Factors such as conversion terms, dividend rates (to be determined), and the intended NYSE listing under “BA.PRA” are key elements for potential investors to consider and compare. This financial move by Boeing, backed by a consortium of leading financial institutions, aims to strategically position the company for future growth and stability in a dynamic market environment. Investors are advised to conduct thorough due diligence and consult financial advisors before making investment decisions related to these offerings.
