In a statement Rolls-Royce said, it plans on raising $2.6 billion (2 billion pounds) from shareholders, 1 billion pounds from the bond market and secure loans to rebuild its balance sheet.
The coronavirus pandemic has ravaged Rolls Royce’s finances after the airlines industry was literally shutdown by the pandemic. Airlines pay the company according to the number of hours its engines fly in wide-body jets. Worries in recovery in the travel industry has pushed down its share price by around 80% so far this year.
On Thursday, Rolls said, “the 10 for 3 heavily discounted rights issue was fully underwritten at 32 pence per share,” amounting to a 41% discount to the closing price of 130 pence per share on Wednesday.
Earlier in May this year, Rolls said it plans on cutting 9,000 jobs as a result of the pandemic; since then its finances have been the subject of media speculation.
“The capital raise announced today improves our resilience to navigate the current uncertain operating environment,” said Chief Executive Warren East in a statement.
In a statement Rolls, which is a key supplier to the government’s military programmes, stated the government has indicated that it is willing to support and extend 80% guarantee of its existing 2 billion pound five-year term loan through UK Export Finance.
It would support a loan amount increase of up to 1 billion pounds.
That is on top of commitments for a new two-year loan facility of 1 billion pounds, said Rolls,
($1 = 0.7727 pounds)