Rolls-Royce Holdings - EGM 27 October 2020
Dramatically hit by the Covid-19 pandemic, Rolls-Royce Holdings is seeking shareholder approval for raising £2bn. The proposed capital increase will be made through the rights issue based on 10 new ordinary shares for every 3 shares held, which corresponds to a 77% dilution. The share price was set at 32 pence per share, a 71.8% discount to the last closing price of £1.136.
This rights issue, largest a non-financial public capital raise in the UK since 2010, follows the recent €2.75bn recapitalisation of International Airlines Group (incorporated and listed in Spain but also on the London Stock Exchange).
Rolls Roycens market capitalisation has fallen to £2.3bn. TSR has slashed by 78% since FY2017. The groupns credit ratings were downgraded with Moodyns and Standard & Poor cutting it to junk.
These capital increase will strengthen the groupns balance sheet by reducing financial leverage and increasing its overall liquidity position. Despite the groupns effort to reduce costs, the need for this fundraising is apparent. We consider that the proposal to increase capital via rights issue is acceptable in light of the current groupns difficulties and the aviation industryns situation.
Rolls Royce Holdings is an engineering company. Co. is organised into five businesses: civil aerospace, which develops, manufactures, markets and sells commercial aero engines and aftermarket services; defense aerospace, which develops, manufactures, markets and sells military aero engines and aftermarket services; power systems, which develops, manufactures, markets and sells reciprocating engines and power systems; marine, which is develops, manufactures, markets and sells marine-power propulsion systems and aftermarket services; and nuclear, which develops, manufactures, markets and sells nuclear systems for civil power generation and naval propulsion systems.
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