Rolls Royce share price has fallen by over 65% as the company faces mounting problems. The share price has fallen from 1100p to 70p, which is the lowest it has ever been since 2003. This makes it the worst performer in the FTSE 100 and in Europe.
Equity Raise Efforts
The shares dropped just a day after the investors of the company backed its 2.6-billion-dollar equity raise. After being hit by a drop in revenue, the firm asked shareholders to back the heavily-discounted rights issue which would unlock £3bn in additional debt options.
They claimed that this would remove any liquidity questions. 99.5% of shareholders voted for the fundraising, which is part of the company’s $5 billion refinancing program.
It appears that the company’s stock prices also dropped due to the rising number of worldwide Covid-19 cases. Many countries such as the UK, France, Germany and Spain have seen second waves of the virus. The US, Canada and Brazil are also seeing an increase in cases.
Severe Cost Cutting
Rolls Royce stated that they are considering closing factories and reducing employee hours to help with cost-cutting. They previously announced a £1.3bn cost-cutting plan which included 9,000 job losses.
Chief Executive Warren East had placed shoring up the company’s finances at the top of his agenda following their losses.
Now, existing investors have been offered 10 new shares for every 3 they own at only 32p each, which is over a 40% discount.
The engineering company is the second-largest manufacturer of aircraft engines and also has major businesses in the energy and marine propulsion sectors.