Rolls-Royce is seeking to raise up to £2.5bn on the London market in an effort to bolster its balance sheet in the wake of the pandemic.
The engine manufacturer said the raise could consist of a mix of options, including a rights issue or debt and equity issuances.
“We continue to review all funding options to enhance balance sheet resilience and strength,” Rolls-Royce said in a statement yesterday.
The FTSE 100 firm is said to be in talks with sovereign wealth funds such as Singapore’s GIC about participating in the raise, the Financial Times reported, which will be launched in early October.
Rolls-Royce was hit hard by travel restrictions linked to the ongoing coronavirus crisis, after orders for its aero-engines fell as airlines struggled.
“The continued reduction by airlines to their flight schedules puts more pressure on Rolls-Royce’s cash flow as it gets paid in line with how much time aircraft are actually in the air,” said Michael Hewson, chief market analyst at CMC Markets.
Rolls-Royce forecast a £1bn outflow in the second half of the year, after burning through £3bn in the first six months.
The Derby-based firm cut at least 9,000 jobs in May. It said last month that it also plans to sell off its Spanish unit ITP Aero among other assets.
Rolls-Royce shares are hovering around a 16-year low, closing on Friday at £1.80 per share.