Speakers from Touchstone Exploration, Shanta Gold, Savannah Resources and Kavango Resources feature in our Natural Resources webinar on May 25th. Please register here.

Less Ads, More Data, More Tools Register for FREE

UPDATE 2-Rolls-Royce shares hit 16-year low on mooted $3 bln equity raising

Mon, 21st Sep 2020 12:13

* Company has confirmed may seek to raise up to 2.5 bln stg

* Shares down 8% to 165 pence

* Government holds golden share
(Adds detail)

By Sarah Young

LONDON, Sept 21 (Reuters) - Rolls-Royce shares hit
16-year lows on Monday after the engine maker confirmed it was
considering a rights issue of up to 2.5 billion pounds ($3.23
billion) following months of speculation about its finances.

Britain's best known engineering company, which makes
engines for airliners, military jets and ships, put out a
statement on Saturday in response to media reports.

Rolls said that no decisions have yet been taken about the
precise amount to be raised or by what means.

Analysts say that Rolls' balance sheet is not in need of
immediate funding.

The stock was down 8% at 165 pence at 1121 GMT.

They have shed 76% of their value this year and a tumble in
recent weeks could make it even tougher to raise as much as 2.5
billion pounds from selling new shares.

The COVID-19 pandemic has hit Rolls hard as airlines pay the
company according to how many hours its engines fly.

Yet given the low share price, Agency Partners analyst Nick
Cunningham said raising new equity would be a last resort.

Rolls in August said it wanted to sell turbine blade maker
ITP Aero and other assets to raise at least 2 billion pounds.

On Saturday it said it was also looking at equity or debt
issuance.

Two senior industry executives who deal with Rolls said they
believed a re-nationalisation or injection of state capital was
possible, but that it was unclear whether the UK had an appetite
for such a move.

Rolls was nationalised in 1971 and later privatised.

Britain owns a golden share in Rolls-Royce and the
importance of the company to the UK's military capability and
its economy in terms of exports, has fuelled talk of a possible
government rescue.

Planemakers Boeing and Airbus are
increasingly concerned about the plight of the company,
according to several sources.

In July, Morgan Stanley analysts warned that a second wave
of COVID-19 infections could necessitate a government bailout.

The Financial Times newspaper reported that Rolls-Royce is
in discussions with sovereign wealth funds including Singapore's
to help underpin any fundraising efforts, but UK consent may be
needed under rules which limit foreign ownership of the company.

($1 = 0.7746 pounds)
(Reporting by Sarah Young; additional reporting by Tim Hepher;
editing by Kirsten Donovan and Jason Neely)

Related Shares

More News

BROKER RATINGS: JPMorgan raises Sage to Neutral; MS ups Whitbread

BROKER RATINGS: JPMorgan raises Sage to Neutral; MS ups Whitbread

14 May 21 09:39

TOP NEWS: Rolls-Royce expects to turn cash positive in second half

TOP NEWS: Rolls-Royce expects to turn cash positive in second half

13 May 21 09:31

LONDON MARKET PRE-OPEN: Burberry brings payout back to pre-virus level

LONDON MARKET PRE-OPEN: Burberry brings payout back to pre-virus level

13 May 21 07:52

Rolls-Royce expects to turn cash-flow positive in second half

(Sharecast News) - Rolls-Royce engines flew at 40% of 2019 levels in the first four months of this year as the company said it expected to turn cash-flow positive in the second half as airline travel recovered from the Covid pandemic.

13 May 21 07:00

Login to your account

Don't have an account? Click here to register.

Quickpicks are a member only feature

Login to your account

Don't have an account? Click here to register.