All the skids of Rolls-Royce
Rolls-Royce, in great trouble over the pandemic, announced a massive £ 5bn recapitalization plan as the UK government said no to the entry of Asian and Arab funds
Rolls-Royce is seeking a £ 5 billion ($ 6.4 billion) recapitalization. The British engine maker is looking to boost its pandemic-stricken balance sheet by issuing new stocks and bonds and taking out new credits, the British company announced Thursday.
As already mentioned last week, the company was considering, with the advice of Goldman Sachs, a capital increase.
Rolls-Royce is in great difficulty due to the crisis in the aviation sector generated by the Covid-19 pandemic.
Its shares fell 7% on Wednesday, hitting their lowest level in 17 years. Losses this year have reached 80%. The British company had already announced the cut of 9,000 jobs due to the crisis.
THE RECAPITALIZATION PLAN
Rolls-Royce has announced that it has obtained a loan of one billion for two years and the extension of an existing guarantee up to one billion pounds by UK Export Finance. Added to this are two billion pounds in shareholder subscription rights and a bond issue of “at least one billion pounds”.
THE COMMENT OF THE BRITISH COMPANY
These are "measures that aim to improve the financial resilience of the group and provide it with a balance sheet structure more adequate to face macro-economic risks until the return to the ability to generate significant liquidity expected in 2022", commented the group. confirming that "the long-term prospects remain good".
INTERVIEWS WITH THE SOVEREIGN FUNDS
According to media reports, Rolls-Royce had talks with large state funds (including GIC, a state fund from Singapore and another from Kuwait) for their entry, which was then faded.
Indeed, the BBC points out that the government holds a “golden share” in Rolls-Royce which prevents the company, considered to be of strategic interest for the United Kingdom, from passing under foreign control.
The company then turned to its current shareholders to find the money it needs to survive the pandemic.
THE IMPACT OF THE COVID-19 CRISIS
Like other engineering and aviation companies, Rolls-Royce has been hit hard by the coronavirus crisis.
Chief Executive Warren East previously announced millions and thousands of job losses. About 8,000 people will be laid off in the aerospace sector and 1,000 in administration, in addition to the 4,000 positions already cut by the company in August. Some of the group's subsidiaries are also for sale.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/piano-ricapitalizzazione-rolls-royce/ on Fri, 02 Oct 2020 13:20:21 +0000.