Rolls-Royce hoping to raise up to £1.5bn by selling new shares
Rolls-Royce is hoping to raise up to £1.5billion by selling new shares after the coronavirus outbreak triggered a slump in global air travel.
The engine-maker will offer stock at a reduced price to existing investors in September, according to reports.
A bumper fundraising has been rumoured for some time and the company has said on several occasions it is reviewing all options to secure more cash. It is now in talks with banks BNP Paribas, Morgan Stanley and Jefferies about the share sale.
Slump: Boss Warren East has described the pandemic as its ‘darkest hour’ since it went bust back in the 1970s
Boss Warren East has described the pandemic as its ‘darkest hour’ since it went bust back in the 1970s.
Although Rolls makes engines, it earns money from maintaining them and its profits depend on the number of hours they fly. The disruption to flights has rocked the balance sheet and the company is cutting 9,000 of its 52,000 employees in a huge overhaul to save cash.
Production cuts in the coming years at the likes of Boeing and Airbus, its major customers, will also be a blow.
It is also thought to be looking to sell its Spanish aerospace arm ITP Aero, which makes parts for the Eurofighter Typhoon jet, for around £1billion.
Asking investors for more cash could be easier than taking on new debt, as two of the three major credit ratings agencies have given it ‘junk’ status, which will make more difficult and expensive to borrow money.
Shares in the group, which have fallen by almost two-thirds this year, closed 3.6 per cent lower, down 9.5p, to 253.1p last night.