Rolls-Royce shares hit 17-year low after it reveals £2bn cash-call

Shares in Rolls-Royce have tumbled to a 17-year low as the aircraft engine-maker announced a GBP5b emergency plan to shore up a balance sheet ravaged by the coronavirus pandemic. The dramatic decline in global air travel during the pandemic has hit Rolls-Royce’s revenues from servicing its jet engines and from selling new ones. The engineering group said it would tap shareholders in a GBP2b rights issue and raise more debt through a GBP1b bond offering. It also announced a new two-year loan of GBP1b and a potential GBP1b extension of a loan that would be 80% backed by the government’s UK export finance agency (UKEF). The GBP2bn rights issue was the largest capital raise by a non-financial public company in the UK since 2010, according to Greenhill, one of the investment banks advising Rolls-Royce. Eleven investment banks were among the recipients of GBP80m in fees connected to the fundraising. It follows days of speculation and share price falls at the manufacturer, which has lost 80% of its value since January and has a market capitalisation of less than GBP2.5b. <br/>