Rolls-Royce has revealed plans to raise up to £2.5bn as it suffers through the aviation sector’s downturn.

The company said that it will “review all funding choices to enhance balance sheet resilience and strength.”

Rolls-Royce said: “Amongst other available choices, we are 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. Our review includes new debt issuance.

“No final decisions happen to be taken as to whether or when you should proceed with any of these options or regarding the precise amount that may be raised.”

Following “rapid management actions” to lessen costs and secure additional liquidity, Rolls-Royce started the second half of 2021 with liquidity of £6.1bn (comprising £4.2bn cash at end June along with a £1.9bn undrawn revolving credit facility).

In addition, it finalised a £2bn undrawn term loan, partly backed through the UK Export Finance, in August.

The business has also launched a major restructuring, particularly its Civil Aerospace business, with forecast annualised pre-tax savings well over £1.3bn by the end of 2022, and has identified numerous potential disposals that are expected to generate proceeds of more than £2bn over the next 18 months, including ITP Aero.

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