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Rolls Royce shares slump after confirming intentions to raise £2.5bn via equity issue

The group said £2.5bn could be raised via a rights issue and/or another form of equity-based funding

Rolls-Royce Holdings PLC - Rolls Royce shares slump after confirming intentions to raise £2.5bn via equity

Rolls-Royce Holding PLC (LON:RR.) saw its shares by drop more than 7% in Monday’s early deals after confirming that it is planning a £2.5bn funding.

A variety of funding methods are presently being evaluated, including a rights issue or some other form of equity issue. Debt financing possibilities are also being reviewed.

“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,” Rolls-Royce said in a brief statement following weekend press speculation.

READ: Rolls is oversold and now a ‘buy’

The British engineering behemoth noted that it started the second half of 2020 with around £6.1bn of liquidity, comprising £4.2bn of cash and £1.9bn undrawn under a revolving credit facility. It follows rapid management actions to reduce costs.

Rolls added that previously, in August, it finalised a £2bn loan that is partly backed by UK Export Finance and remains undrawn and has identified a number of asset potential disposals that could generate over £2bn of proceeds over the next 18 months.

In London on Monday, Rolls Royce shares fell 7.47% or 13.8p to change hands at 166.35p.

Quick facts: Rolls-Royce Holdings PLC

Price: 227.9 GBX

Market: LSE
Market Cap: £4.41 billion

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