Rolls Royce Engines To Tap Investors for Additional Funding

Rolls Royce engines its investor-tapping scheme to generate cash. The move aims to help the business keep its head afloat amid the coronavirus disruption.

The firm announced that it currently looks to raise £2.5 billion or $3.2 billion in an effort to iron its turbulent balance sheet.

Among the options currently considered include rights issue. Similarly, debt and equity options are also being studied upon.

The equity raise expects to enter into force sometime in October, a source familiar to the deal said.

The power systems firm is reportedly in talks with several governments, prominently Singapore’s GIC, to raise fresh cash. However, no confirmation is made as the investment corporation declined to comment on the matter.

To date, the firm had already burned £3 billion outflow in the first half of the year due to the problematic macro and microeconomic headwinds it weathered during the start of the pandemic. It expects to burn another £1 billion in the second half.

The company admitted that they are currently in the review of all possible funding sources to enhance their finances’ resilience and strength.

Will Additional Funding Suffice the Losses?

The UK government currently holds a significant amount of shares in the power systems provider, preventing it from succumbing under foreign control.

Due to its involvement, the chair of the Rolls Royce parliament informal group called the UK to consider taking another stake from the company in its capital raising initiative.

The power systems firm is also reported to have tapped Goldman Sachs bankers to help the firm in the process.

Last week, the firm’s shares fell into their historic lows after its market value fell into £3.45 billion with net debt of £4.4 billion. The per-share price ended last week’s trade at £180.

Rolls Royce engines currently sell below production price due to sluggish demand from aircraft manufacturers. It has let go of its 8,000 employees in the year so far.