Rolls-Royce sells 94% of new shares in £2 billion rights issue



© Reuters. FILE PHOTO: A man looks at Rolls Royce’s Trent Engine displayed at the Singapore Airshow in Singapore

LONDON (Reuters) – British engineering company Rolls-Royce (L:) said shareholders signed up for 94% of new shares it issued as part of a 2 billion pound ($2.64 billion) rights issue aimed at bolstering its pandemic-hit finances.

Airlines pay Rolls based on how many hours its engines fly and as such, the company’s finances have come under increasing pressure after COVID-19 stopped travel earlier this year.

The equity raise unlocks new debt options including 2 billion pounds from a bond issued in October and a bank loan worth 1 billion pounds, as part of a total 5 billion pound liquidity package for the company.

While the overwhelming majority of shareholders backed the deal, the results on Thursday show that there were some dissenters to the issue from what is one of the UK’s best known industrial names, with 6% of the new shares issued not taken up.

Rolls-Royce said that the underwriting banks would now try to procure subscribers for the remaining shares, but failing that had agreed to subscribe for them themselves.

Rolls-Royce’s CEO Warren East says the company can ride out COVID-19 with the new liquidity package plus by making cost cuts of 1.3 billion pounds, axing 9,000 jobs and closing factories to adjust to lower demand from airline customers that fly with Rolls engines on Boeing (NYSE:) 787s and Airbus 350s.

The new shares are due to start trading at 0800 GMT on Thursday, the latest development in a tumultuous week for the stock. Boosted by news of a vaccine, its shares rocketed by over 90% at one stage on Monday, but closed down 10% on Wednesday.

READ  FTSE 100 slides with focus on emergency Brexit talks, Morrisons slips
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here