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cr0ft
Sensible post, far more so than some I have read on here today. If there is a share issue it will inevitably be at at discount, else with sufficient liquidity the people who RR seeks funds from would buy in the market instead! Of course a fund raise could be through debt rather than equity, but at the moment the terms for that would be pretty penal - given current performance and short term prospects the interest rate demanded would be high (I believe some existing debt has been reduced to junk bond status). With the SP dropping daily a large fund raise through equity is likely to be at a substantial SP discount, but unless its a placing with selected institutions you should be invited to participate - and when the rights to that participation go 'ex' there should be an increase from where the SP is then. These are my opinions only
Any raise should remove short term uncertainty (which markets do not like) and provide some stability for the company to progress with any restructuring plans.
The markets may see this as a positive move which will, hopefully, underpin the SP and prevent any further slide - the reasons for any raise would be outlined, and hopefully include additional action points to reduce costs and try to increase revenue during this difficult time.
That would be my hope, anyway, although admittedly, not always the case.
We will find out soon enough at the open tomorrow.
It could be a bumpy week ahead
@thegame316
How will an equity raise lead to the price going up in the short term? It’s my understanding that when any equity is raised existing shareholders are diluted and so the share price will go down?
If the equity raise adds value, I.E is used to pay for new acquisitions etc I could see a rise after that. This one is just being done so RR can survive though, isn’t it?
Am I missing something?
All sounds a bit scary. A company with 3.5bn MC (according to LSE Fundamentals) raising maybe 6bn though disposals and funding?
Sovereign Wealth Funds are tooth fairies bringing tenners under Rolls pillows haha
“RE: 2.5bn Equity raiseToday 18:37
This, according to the news will be raised through Sovereign Wealth Funds.
So, no RI needed , and no Share value dilution, which is great news
This is my understanding
It will be an interesting Monday !“
No dilution?
No interest either
RR are getting a £2.5bn gift?
Not so sure that’ll be the case
Having read the article it’s all speculation again. “3 different people with close ties to the situation” it’s all he said she said no facts.
This, according to the news will be raised through Sovereign Wealth Funds.
So, no RI needed , and no Share value dilution, which is great news
This is my understanding
It will be an interesting Monday !
GLA
The raise will lead to sp correction. Can see this hitting £3+ by end of October. Estimated cash outflow for second half of the year is around £1bn. With the £2.5bn raise it gives RR liquidity of around £8.6bn so its future is secure. Especially with the recent layoffs announced. I know someone who is an engineer at the Derby plant. According to him you can break down the engineers on the shop floor into 2 groups . Those who know what they are doing and have the specialist knowledge that is hard to get and the second are the ones who were lucky they even managed to get hired and have to be told what to do 90% of the time as they don't know squat and have to have most of their work double checked before it can be signed off. Hopefully people from the latter have been laid off leaving the valuable workers to get on with doing the job.
Wonder how the markets will react to this
A rally borne out of more certainty?
A sell of fuelled by fear of dilution?
Should be an eventful Monday
This could be the start of an upturn. The current price is due to uncertainty about finances. If £2.5bn is raised along with the current £6bn liquidity and upcoming £2b disposal then that more than covers the expected £2bn cash outflow for the second half of the year.
The sp has fallen rapidly over the last few weeks so can easily rise just as rapidly. Monday will be the litmus test. If the week starts with a blue day then it will be happy days
Interesting article perhaps a RI is the way froward for RR. It should help to get rid of the junk rating especially once ITP Aero and other assets are sold. It is important that RR has a good investment rating as it provides long term servicing contracts and it will not be able to win these contracts in the future if it has a junk rating. At the end of the day I am very confident that RR will not go bust. The government and airlines can't let that happen. I will be happy to hoover up discounted shares during a RI and Hold. GLA
This just in FT: https://www.ft.com/content/6f53a18d-acd8-4a71-8902-60b1bb5f9c09