Spirit Aero shares fall on new capital raise plans
Reuters
Published Nov 08, 2023 11:23AM ET
Updated Nov 08, 2023 02:07PM ET
By Chibuike Oguh
NEW YORK (Reuters) -Shares of Spirit AeroSystems (NYSE:SPR) dropped nearly 15% on Wednesday, a day after the aerospace supplier unveiled debt and stock offerings to raise up to $400 million to bolster its dwindling balance sheet.
Spirit plans to raise $200 million via the sale of Class A common stock and issue $200 million in convertible debt maturing in 2028, the company said after the closing bell on Tuesday.
Its stock fell as low as $20.98 following the news, bringing its year-to-date losses to about 25%. It was last down 9.3% on the day.
The median price target of the 18 analysts covering Spirit is $29, up from $26 in October, and their current recommendation is "buy," LSEG data showed.
A Spirit spokesperson did not immediately respond to a request for comment.
Spirit is a major supplier of large aircraft parts such as wings and fuselages for manufacturers including Boeing (NYSE:BA) and Airbus. Persistent production quality problems have slowed aircraft deliveries.
Last week, Spirit projected higher-than-expected cash burn for 2023, forcing it to slash anticipated deliveries of 737 fuselages. Free cash burn will range from $275 million to $325 million for 2023, up from a previous range of $200 million to $250 million, it said.
The company ended the third quarter with a cash balance of $374.1 million and debt of $3.8 billion.
Spirit's capital raise is a "prudent move" that should bolster liquidity despite adding about $14 million in annualized interest expense and diluting its outstanding shares, Truist Securities analysts led by Michael Ciarmoli said in an investor note. Truist recommends holding the stock.
Spirit on Wednesday launched, as expected, a $1.2 billion debt offering for senior notes maturing in 2030. Net proceeds will be used to repay $1.2 billion of senior notes due 2025.
In October, Spirit named former Boeing executive Patrick Shanahan as interim chief executive, replacing Tom Gentile, who stepped down following a series of supply chain challenges and production defects. Shanahan is a former U.S. deputy secretary of defense.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.