Deutsche Bank analyst John Inch believes the new board that General Electric (GE) announced yesterday increases the likelihood of a capital raise.
At least one or more of the new board members might advocate for GE to raise equity capital and provide for a more apt liquidity cushion given the company’s “current cash squeeze and significant balance sheet risks,” including $37B of long-term debt maturities at GE Capital over the next three years, Inch tells investors in a research note. The analyst has a Sell rating on General Electric with a $13 price target. The stock closed yesterday up 15c to $14.65.
Inch knows new board member Larry Culp, and questions, whether he would “want to risk his stellar reputation, should GE find itself inadequately capitalized over the coming quarters.” Inch expects any potential equity raise to occur beyond the next few months as the new members “wrap their heads around GE’s abundance of ‘issues'”.
