Rolls-Royce shares plummeted after the aerospace giant confirmed it is considering raising £2.5billion from a rights issue or other fundraiser to shore up its balance sheet..
Shares in the UK the group tumbled by 8.13 per cent today after it acknowledged the media speculation on Friday and admitted it was reviewing all funding options.
Rolls-Royce said: ‘Amongst other options, we are evaluating the merits of raising equity of up to £2.5billion, through a variety of structures including a rights issue and potentially other forms of equity issuance. Our review also includes new debt issuance.’
Could Rolls-Royce get investment from a sovereign wealth fund like Singapore’s GIC soon, or could the funding come from within our boundaries?
The review will also see it consider taking on new debt to support its finances after the aerospace industry was hammered by the pandemic.
The company added: ‘No final decisions have been taken as to whether or when to proceed with any of these options or as to the precise amount that may be raised.’
It has been reported that the company is in talks with a number of sovereign wealth funds, including Singapore’s GIC, to secure the funds. This is Money has contacted GIC for comment but at the time of publication has not yet received a response.
The Derby-based company has done much to try and stem the impact Covid-19, which it described as ‘unprecedented’.
Back in May it announced that 9,000 jobs would be axed from its 52,000 global workforce in response to the crisis – 3,000 of which will be in the UK.
Warren East, CEO of Rolls Royce, said at the time: ‘This is not a crisis of our making.
‘But it is the crisis that we face and we must deal with it. Our airline customers and airframe partners are having to adapt and so must we.
‘Being told that there is no longer a job for you is a terrible prospect and it is especially hard when all of us take so much pride in working for Rolls-Royce. But we must take difficult decisions to see our business through these unprecedented times.
‘Governments across the world are doing what they can to assist businesses in the short-term, but we must respond to market conditions for the medium-term until the world of aviation is flying again at scale, and governments cannot replace sustainable customer demand that is simply not there.
‘We have to do this right, which means we will work closely with our employee and trade union representatives as appropriate, look at any viable alternatives to mitigate the impact, consult with everyone affected and treat our people with dignity and respect.’
Last month, the company slid to a £5.4billion half-year loss as it was battered by the downturn in air travel.