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Rolls Royce Shares Hit a New Low Due to $3 billion Equity Raise

Shares of Rolls Royce, Britain’s one of the most well-known engineering names has sunk to its lowest level since 2004, just after the British company confirmed that it was considering a rights issue of up to 2.5 billion pounds, after months of speculation about its finances.

Rolls Royce has put on a statement in response to different media stories, confirming the amount of new equity it might look to raise.

Due to the Covid-19 pandemic, most of the airlines around the globe had to ground their fleet, which eventually has blown a major hole in the engine maker’s pocket. Why? Airlines pay the company depending on how many hours its engine fly. However, due to the groundings around the world, Rolls Royce accumulated a massive loss of 5.4 billion pounds in the first half of 2020.

Rolls Royce also confirmed that it was reviewing funding options, “we are evaluating the merits of raising equity of up to 2.5 billion pounds, through a variety of structures including a rights issue and potentially other forms of equity issuance. Our review also includes new debt issuance.”

However, shares of the British company traded down to as low as 10% to 161 pence, losing 76% of value in the year to date.

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