Rolls-Royce shares tumble to 17-year lows on cash call

Rolls-Royce shares tumbled to 17-year lows after the company unveiled a £2 billion (€2.19 billion) investor cash call as part of a mammoth package to bolster its balance sheet in the face of the coronavirus crisis.

The engine maker announced the 10-for three rights issue alongside a bond sale to raise at least a further £1 billion, as well as another £2 billion in loan support.

Rolls-Royce said the fundraising would help it weather wider economic risks from the pandemic, which has hammered the aerospace industry.

Shares dropped 9 per cent, taking the under-pressure stock down to its lowest level since 2003 following recent heavy falls.

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The plans comes on top of a major restructuring announced by Rolls-Royce in May that will see it axe at least 9,000 jobs globally in response to the crisis – 3,000 of which will be in the UK.

Last month, the company slid to a £5.4 billion half-year loss as it was battered by the downturn in air travel.

In a brief update on trading on Thursday, it said revenues and underlying earnings are “materially” lower for the first eight months of the year. It is not expecting to return to strong cash generation until 2022.

Rolls said the rights issue was fully underwritten.– PA