Rolls-Royce sells 94% of new shares in 2 billion pound rights issue

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British engineering company Rolls-Royce RR.L said shareholders signed up for 94% of new shares it issued as part of a 2 billion pound ($2.64 billion) rights issue aimed at bolstering its pandemic-hit finances.

Airlines pay Rolls based on how many hours its engines fly and as such, the company’s finances have come under increasing pressure after COVID-19 stopped travel earlier this year.

The equity raise unlocks new debt options including 2 billion pounds from a bond issued in October and a bank loan worth 1 billion pounds, as part of a total 5 billion pound liquidity package for the company.

While the overwhelming majority of shareholders backed the deal, the results on Thursday show that there were some dissenters to the issue from what is one of the UK’s best known industrial names, with 6% of the new shares issued not taken up.

Rolls-Royce said that the underwriting banks would now try to procure subscribers for the remaining shares, but failing that had agreed to subscribe for them themselves.

Rolls-Royce’s CEO Warren East says the company can ride out COVID-19 with the new liquidity package plus by making cost cuts of 1.3 billion pounds, axing 9,000 jobs and closing factories to adjust to lower demand from airline customers that fly with Rolls engines on Boeing 787s and Airbus 350s.

The new shares are due to start trading at 0800 GMT on Thursday, the latest development in a tumultuous week for the stock. Boosted by news of a vaccine, its shares rocketed by over 90% at one stage on Monday, but closed down 10% on Wednesday.

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