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Spirit AeroSystems (NYSE:) Holdings, a supplier to Boeing (NYSE:), announced plans on Wednesday to sell $200 million each in common stock and debt. The announcement comes at a challenging time for the company, characterized by the COVID-19 pandemic and quality issues, which led to a 15% premarket stock price drop. Despite Spirit AeroSystems’ market capitalization of $2.6 billion, the move has raised concerns about dilution and increased interest expenses.
The funds raised will be used to address general corporate needs and high cash-burn issues. Over the past four years, Spirit has used approximately $1.9 billion in cash. Its free cash flow, which stood at $723 million in 2019, is projected to recover to $242 million by 2025 from an estimated negative of $305 million in 2023. However, this recovery is dependent on Boeing increasing plane shipments and Spirit addressing delays in aircraft parts delivery.
In support of Spirit, Boeing restructured its financial obligations on October 18, leading to a 23% surge in Spirit’s stock. Despite this support from Boeing, the announcement of the stock and debt sale occurred while and remained flat, further underscoring Spirit’s financial challenges.
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