Rolls-Royce has revealed plans to raise up to £2.5bn as it suffers through the aviation sector’s downturn.
The company said that it will “review all funding options to enhance balance sheet resilience and strength.”
Rolls-Royce said: “Amongst other options, we are evaluating the merits of raising equity of up to £2.5bn, through a variety of structures including a rights issue and potentially other forms of equity issuance. Our review also includes new debt issuance.
“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.”
Following “rapid management actions” to reduce costs and secure additional liquidity, Rolls-Royce started the second half of 2020 with liquidity of £6.1bn (comprising £4.2bn cash at end June and a £1.9bn undrawn revolving credit facility).
In addition, it finalised a £2bn undrawn term loan, partly backed by the UK Export Finance, in August.
The business has also launched a major restructuring, in particular its Civil Aerospace business, with forecast annualised pre-tax savings of over £1.3bn by the end of 2022, and has identified a number of potential disposals that are expected to generate proceeds of more than £2bn over the next 18 months, including ITP Aero.