Rolls-Royce’s £2bn cash call has been “overwhelmingly” backed by shareholders, unlocking a rescue package totalling £5bn.
Investors supported the 10-for-3 rights issue in which they can buy new shares at 32p - a 41pc discount.
Agreeing to the rights issue allows Rolls to access £2bn of bonds it has sold, and the Government has backed a potential £1bn of further debt.
The funding package is vital to Rolls’s survival as the company, which posted a £5.4bn half-year loss last month, has been hammered by the collapse in demand for air travel caused by Covid-19.
A massive cost-saving programme has been launched that includes 9,000 redundancies - 15pc of the global workforce - and a £2bn disposal programme.
In a bid to halt it haemorrhaging cash following a collapse in demand for its engines and maintenance services, Rolls is also considering temporary shutdowns of factories and cuts to employee benefits.
Explaining the rationale for the funding package, chairman Ian Davis said the pandemic has had an “unprecedented impact” on the global aerospace sector.
He added: “The board took the reluctant but unanimous decision to ask shareholders for support. This comprehensive package provides considerable headroom, even in a reasonable worst-case scenario, where possible subsequent infection waves result in very low flying activity through 2021 and 2022.”
The chairman said the funding would provide liquidity and allow Rolls to restructure, continue to invest in future programmes, as well as help the business return to an investment grade rating in the medium term.
Asked by investors why Rolls was not waiting until next year to secure extra funding, chief executive Warren East said it might not be able to tap investors and markets then.
“Next year there may well be less uncertainty, but on the other hand we might find the situation has worsened and the debt and equity markets are closed,” he said.
Without the funding now, Mr East warned that Rolls could face a liquidity squeeze. “In the event of a reasonable worst-case scenario, we did not want to put the business and shareholder interests at risk by gambling on what the situation might look like in the middle of next year.”
Shares in Rolls closed 3.1pc lower at 219p.