Rolls-Royce has secured support to tap investors for £2bn and guarantee a hefty war chest to ride out the coronavirus crisis.
The aerospace firm – hit by a pandemic plunge in revenue – asked shareholders to back the heavily-discounted rights issue on the basis it would unlock £3bn in additional debt options to navigate the COVID-19 disruption.
Rolls, which is paid based on the number of hours its engines fly, had said that having the additional £5bn at its disposal would take “any liquidity questions off the table through this crisis”.
The company reported that 99.5% of shareholders supported the rights issue vote.
The cash call sees existing investors offered 10 new shares for every three they own at 32p each – a discount of more than 40%.
Chief executive Warren East had placed shoring up the company’s finances at the top of his agenda following a “sharp deterioration” that culminated in a record half-year loss of £5.4bn.
Rolls launched a £1.3bn cost-cutting plan, including 9,000 job losses, as it adjusted to the collapse in demand for international travel.
Warren East had warned earlier this month that he didn’t want to gamble on whether Rolls would need more cash
It has confirmed a development, first reported by the Financial Times, that staff have been informed of the possibility of temporary factory closures and reductions to working hours and benefits as the crisis evolves.
Rolls-Royce has signalled that no decisions have been taken on any additional cost-saving measures.
Mr East told investors ahead of the rights issue vote: “We didn’t want to put the business and our shareholders’ interests at risk by gambling on what the situation might look like in the middle of next year.”
Shares, which remain two-thirds down in the year to date, were trading 2.4% lower on Tuesday.