LONDON, Oct 1 — British aerospace giant Rolls-Royce, facing plunging demand as coronavirus sparks an air transport crisis, launched plans today to boost its finances by as much as £5 billion (RM26.73 billion).
Rolls-Royce said the package would comprise a £2 billion rights issue of shares, a bond offering of at least £1.0 billion, a new £1 billion loan facility, plus state support from UK Export Finance for an extension of an existing loan guarantee of up to £1 billion.
The company, whose products power Airbus and Boeing aircraft, is strengthening its balance sheet to help navigate the damaging fallout from the ongoing global health emergency that has grounded jets worldwide.
The engine maker also revealed that it now planned to shed a total of 9,800 jobs by the end of this year, up from the 9,000 announced in May.
“The sudden and material effect of the Covid-19 pandemic has had a significant impact on the commercial aviation industry, resulting in a sharp deterioration in the financial performance of our civil aerospace business and, to a lesser extent, our power systems business,” Chief Executive Warren East said in a statement.
“We are undertaking decisive and transformative action to fundamentally restructure our operations, materially reduce our cost base and improve our financial position.”
“The capital raise announced today improves our resilience to navigate the current uncertain operating environment. By raising additional capital now, we will improve our liquidity headroom and reduce our level of balance sheet leverage, while supporting disciplined execution and investment to ensure we maximise value from our existing capabilities.”
Today's announcement comes one month after Rolls-Royce — which operates in the air, defence and energy sectors — logged a massive net loss of £5.4 billion for the first half of 2020 as the coronavirus outbreak worsened.
It unveiled a £2 billion asset disposal programme last month as part of an ongoing overhaul. — AFP
