Rolls-Royce has confirmed that it is to conduct a rights issue and bond offering to raise a combined total of £3bn as part of a recapitalisation programme.
Noting that its overall recovery majorly depends on the resumption of long-haul air travel, the group noted it is looking to return to positive cash flow during the second half of 2021.
“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.“Warren East, CEO
The rights issue will be on a 10 for 3 basis and issue new shares at 32p per new ordinary share in order to raise around £2bn. This rights issue is still subject to approval at a general meeting on 27 October.
To support this, the company is also looking at a bond offering to raise £1bn of proceeds.
The share price of Rolls-Royce fell 3 percent in early trading following the announcement.