Britain’s Rolls Royce says it plans to raise STG2 billion ($A3.6 billion) from shareholders, STG1 billion from the bond market and secure further loans to rebuild its balance sheet after COVID-19.
The pandemic has battered Rolls’s finances as airlines pay the company according to how many hours its engines fly in wide-body jets. Worries that a recovery in travel will take years have pushed its share price down by 80 per cent this year.
Rolls said on Thursday that the 10 for 3 heavily discounted rights issue was fully underwritten at 32 pence per share, a 41 per cent discount to the closing price of 130 pence per share on Wednesday.
In May, the company said it would cut 9000 jobs as a result of the pandemic and its finances have been the subject of media speculation since.
“The capital raise announced today improves our resilience to navigate the current uncertain operating environment,” said Chief Executive Warren East in a statement on Thursday.
Rolls, a key supplier to the government on military programs, said that the UK government through UK Export Finance has also indicated it was ready to support an extension of its 80 per cent guarantee of Rolls’ existing STG2 billion five-year term loan.
It would support a loan amount increase of up to STG1 billion.
That is on top of commitments for a new two-year loan facility of STG1 billion, the company said.