Rolls placing raises £330m
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Rolls-Royce yesterday raised £331m in a placing with City investing institutions to finance its purchase of Allison Engine Company, the US aircraft engine manufacturer.
The takeover was agreed in November but awaited regulatory approval. Sir Ralph Robins, the Rolls-Royce chairman, said Allison was a leader in light helicopter and large military turboprop engines, and he was confident it would raise Rolls's earnings per share.
Allison, which has suffered from the heavy costs of developing and introducing new technology, had a pre-tax profit last year of only $6m.
That was after the company had achieved four consecutive quarters of improvement brought about by lower research and development spending, cost-cutting and withdrawal from loss-making automotive businesses.
The company is to become the centre of Rolls's operations in the US. As a condition of approval by American regulators, Rolls has pledged to protect sensitive US technology.
The issue of new shares was by a vendor placing with UK and overseas institutions which the company's advisers, Rothschild, said was the largest of its kind.
The vendor placing represented 19 per cent of Rolls-Royce shares. Other shareholders will have the opportunity to make offers to buy back up to 100 per cent of the new shares from institutions over the next three weeks. This clawback arrangement is obligatory with placings of over 5 per cent of a firm's equity.
Existing shareholders are entitled to apply for one new ordinary share for every 5.4 Rolls shares they hold.
Rothschild said the method allowed Rolls to place its shares at a smaller discount to the market price than with a conventional rights issue. At 154p a share, the placing was at a discount of just over 5 per cent to the opening price of 164p, which was unchanged at the close.
The placing method, underwritten by Rothschild, does not reduce the merchant bank fees for the capital-raising. But the low discount should help to meet some of the criticisms made on Thursday by the Office of Fair Trading, which was concerned about the cost to firms of raising new equity capital.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments