Share price tanks again at Rolls-Royce

The share price of Rolls-Royce has fell even further on Thursday trading, reaching new 16-year lows.

As the firm tries to raise £2.5bn to counteract the downturn in the aviation industry, shares were changing hands for as little as 150.1p at close last night – down 7.6% or 12.3p.

The new low is a far cry from the halcyon days of 2014 for Rolls-Royce shareholders, when their stock was worth £12.50 a share. Even as recently as February of last year, the Derby company’s shares were changing hands for £9 each. This week alone, almost 40p has been wiped off the value of each share.

The new drop in price means that the company’s worth has now dipped below £3bn and comes on the back of an announcement earlier this week in which the manufacturer said it was looking to raise the extra cash to help it through any second wave of the pandemic.

The firm said it is “evaluating the merits” of raising equity of up to £2.5bn, through a variety of structures including a rights issue and potentially other forms of equity issuance. The review also includes new debt issuance.

A statement added: “No final decisions have been taken as to whether or when to proceed with any of these options or as to the precise amount that may be raised.

“As we said on 27 August 2020, following rapid management actions to reduce costs and secure additional liquidity, we started the second half of 2020 with liquidity of £6.1bn (comprising £4.2bn cash at end June and a £1.9bn undrawn revolving credit facility).

“In addition, we finalised a £2bn undrawn term loan, partly backed by the UK Export Finance, in August. We have also launched a major restructuring of our Group, in particular our Civil Aerospace business, with forecast annualised pre-tax savings of over £1.3bn by the end of 2022. As previously announced, we have also already identified a number of potential disposals that are expected to generate proceeds of more than £2bn over the next 18 months, including ITP Aero.

“A further announcement will be made if and when appropriate.”