ROLLS-ROYCE HITS ITS LOWEST IN 17 YEARS WITH A PLAN TO RAISE $3.2 BILLION | AUTO INDUSTRY
Updated: Sep 27, 2020
Rolls-Royce hits its lowest in 17 years after detailing a plan to raise as much as $3.2 billion (2.5 billion pounds) for support against the lowest demand for aircraft engines. The company is searching options including a rights issue, other forms of equity, and new debt, it said Saturday, confirming an amount reported by the Financial Times that was greater than in previous reports. shares value decrease for a fifth straight day on Monday around 9.1 %
Because of this COVID Pandemic, RR lost its 3 quarter value this year. RR has been hit hard because of ban or restriction on long-distance because of it RR plane engine sell hit the most. Many aircraft which was in operation before the pandemic they all are now temporary or permanently grounded. So RR maintenance revenue is gone very deep.
In an interview published Monday in L’Opinion, Chief Executive Officer Ben Smith said the pandemic is forcing the company to accelerate and deepen its revamp. The airline will only operate profitable flights, he was quoted as saying.
Rolls stock sank 9.7% as of 9:28 a.m. in London, giving it a market value of 3.14 billion pounds, while Airbus and Air France-KLM shares dropped as much as 4.4% and 5.3% respectively. Leonardo’s stock fell to its lowest level in four months.
While a share issue would dilute existing investors at the lowest prices since 2003, Rolls-Royce has also seen its debt downgraded to junk this year, meaning borrowing would come at a higher cost than before the pandemic.
“We continue to review all funding options to enhance balance sheet resilience and strength,” Rolls-Royce said in a statement on Saturday. The options include “a variety of structures including a rights issue and potentially other forms of equity issuance. Our review also includes new debt issuance,” it said.
The company said it hasn’t decided if it’s moving ahead with any of the options or the timing of the fundraising. Last week, it said it’s continuing to consider ways to bolster its coffers after the coronavirus-driven aviation downturn slammed revenue.