Cobham share price edges down as it targets £512.4m in its rights issue

 
Courtney Goldsmith
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Cobham has had a turbulent year so far (Source: Getty)

Troubled aerospace and defence firm Cobham has revealed it will raise around £512.4m in its rights issue to reduce debt, which is somewhat higher than earlier estimates.

The two for five rights issue of 683.1m shares was priced at 75p per share, or a 40.9 per cent discount to its Monday closing price of 126.8p.

The firm's share price edged down slightly in morning trading.

David Lockwood, the boss of Cobham, said: "This rights issue will significantly strengthen Cobham's balance sheet and, together with other actions, will provide us with a sustainable platform for the future.

"It is the first step in reducing the group's leverage ratio towards the group's target of 1.5x, both reassuring our customers and giving us the flexibility to drive operational improvements."

The firm, which is under investigation by the Financial Conduct Authority (FCA), said its balance sheet is currently not strong enough to support its operations.

In February, Cobham issued its fifth profit warning in fewer than two years, causing shares in the FTSE 250 firm to plunge more than 20 per cent.

Yesterday it was revealed the FCA is examining how the company handled information about last year's £500m rights issue.

Lockwood added the board believes the group will return to positive organic growth and improved profitability over the medium term.

Cobham expects the right issue to be completed in the second quarter and maintained its 2017 expectations.

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