Rolls-Royce will raise 2 billion pounds to strengthen its finances that have been hit by deteriorations in civil aerospace, due to pandemic, according to BBC. The UK plane engine maker will issue new debt, while rights issue could unlock further 1 billion pounds from the state’s Export Finance. Rolls-Royce has already borrowed 2 billion pounds from the state.
- If rights issue successfully, Rolls-Royce will unlock 3 billion pounds worth of loans
- 5 billion recapitalizations adequate for company to see it through another coronavirus spike
- Under the rights issue, investors will get 10 shares for every three they own, priced 32 pounds
- Company will cut 9,000 jobs to save costs and sell off parts of business to raise 2 billion pounds
- Extension of government loan depends on UK Export Finance and HM Treasury approving the rights issue terms, no guarantee that an increase will occur
- Capital raised to enable Rolls-Royce to improve resilience and navigate uncertain operating environment
- State holds a “golden share” in Rolls-Royce, which shields company from foreign control
- Company has secured commitments totaling 1 billion two-year loan facility and plans to issue further 1 billion bonds.
Rolls-Royce’s share fell 5.85% to 122.4 pounds in early London trading on rights issue and uncertainty. RR: LSE is down 12.33%