Rolls-Royce bulks up ITP arm for a sale

Rolls-Royce is dressing up its Spanish ITP division for sale by bundling it with other businesses, in an attempt to attract a higher price and stave off a coronavirus cash crunch.

The engineer is in talks with private equity houses about a deal to offload ITP, whose products have included parts for the Eurofighter Typhoon jet engines, but is understood to be trying to bulk up the division to make it a more tempting purchase.

Options being considered include wrapping in engine components currently produced in other Rolls factories, such as its plants in Barnoldswick, Lancashire.

Bulking up ITP would help Rolls hits its target of raising £2bn through disposals as the company battles to shore up its finances.

Last week, it emerged that the company – which sank to a record £5.6bn loss at its interim results in August – was in discussions with the Kuwait sovereign wealth fund about it taking part in an emergency fundraising.

The Kuwait Investment Office is discussing a deal which could also see rival Singapore Government Investment Corporation take a chunk of Rolls in a placing of up to £500m, part of an expected £2.5bn equity raise the company might announce as soon as next week.

The remaining £2bn is likely to come from a rights issue with existing shareholders, though Rolls said it could also issue new debt.

The UK Government retains a “golden share” in Rolls as a legacy of the company’s nationalisation in 1971, when it came close to collapse. Officials are monitoring how a bailout might be structured as the Government has a veto on a change of Rolls’s ownership, which could impact the company’s sensitive defence work building nuclear reactors for Royal Navy submarines.

A spokesman for Rolls said: “We continue to review all funding options to enhance balance sheet resilience and strength. No final decisions have been taken.”