A Rolls Royce Trent XWB engine on the assembly line at the Rolls Royce factory in Derby, the UK. Picture: REUTERS
A Rolls Royce Trent XWB engine on the assembly line at the Rolls Royce factory in Derby, the UK. Picture: REUTERS

New York — Rolls-Royce says it may raise as much as £2.5bn as it weighs options to boost its balance sheet.

The British maker of aircraft engines is in talks with sovereign wealth funds, including Singapore’s GIC, as it turns to investors for the funds next month, the Financial Times reported, citing three people with direct knowledge of the matter. The company is working with Goldman Sachs on the planned equity raise, it added.

“We continue to review all funding options to enhance balance sheet resilience and strength,” Rolls-Royce said in a statement. The options include “a variety of structures including a rights issue and potentially other forms of equity issuance. Our review also includes new debt issuance,” it said.

The company said it has not decided if it is moving ahead with any of the options or the timing of the fundraising. Earlier last week it said it is continuing to consider ways to bolster its coffers after the coronavirus-driven aviation downturn slammed revenue.

The maker of wide-body turbines has been hard hit by the drop in long-distance travel, with its share price down 74% this year and its debt downgraded further into junk. This puts Rolls-Royce in a bind, faced with further diluting equity investors or borrowing money at higher costs.

Bloomberg

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