Rolls Royce has ditched talks with sovereign investors in Kuwait and Singapore amid a shareholder backlash.
Institutional investors were displeased by the jet engine-maker’s plans to dilute their interests by selling a £500m stake in the company as part of a £2bn fundraise to help it weather the pandemic, City insiders told Sky News.
The FTSE 100 stalwart, which has been hammered by the collapse in air travel, is expected to announce a plan to shore up its finances today. Awhich a source said it was likely to include extra borrowing headroom as well as about £2bn of new equity.
Banks including BNP Paribas and HSBC are reportedly involved in the cash call, while Goldman Sachs is advising Rolls-Royce’s board, which is chaired by Sir Ian Davis.
Rolls-Royce has already announced plans to axe 9,000 jobs as a result of the virus, but has said it has liquidity of up to £8bn. None the less, analysts have warned that could last the company less than a year.
Unlike most of corporate Britain, the state has a share in Rolls-Royce, meaning Whitehall has a veto over some of its strategic decisions. The Government could yet step in to help Rolls-Royce but it is unclear whether that is part of the immediate plan.
In its most recent statement about the fundraise, it the company said: “We continue to review all funding options to enhance balance sheet resilience and strength.
“Amongst other options, we are evaluating the merits of raising equity of up to £2.5bn, through a variety of structures including a rights issue and potentially other forms of equity issuance.
“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.”
The shares closed down 10.4p at 130p