Rolls-Royce looks to double up on October 1 bond offering to now raise £2 billion

On October 1, Rolls-Royce Holdings (Rolls-Royce) announced its intention to raise at least £1 billion through a bond offering as part of its strategy to raise £5 billion in a recapitalization package to support its long-term strategy. However, unanticipated strong demand for the investor Notes has seen the company double the size of the offering, which will now comprise three tranches in three separate currencies issued by Rolls-Royce and guaranteed by the Company.

The Bond Offering will comprise:  US$1,000 million aggregate principal amount of 5.750% Notes due 2027; €750 million aggregate principal amount of 4.625% Notes due 2026; and £545 million aggregate principal amount of 5.750% Notes due 2027. The recapitalization package also includes an approximately £2 billion fully underwritten rights issue (the “Rights Issue”) and commitments for a new two-year term loan facility of £1 billion. The combination of the proceeds from the Notes, the Rights Issue and the commitments for the new £1 billion term loan facility is expected to provide the company with gross proceeds of approximately £5 billion.

According to Rolls-Royce, it has “also received support in principle from UK Export Finance for an extension of its 80% guarantee to support a potential increase of up to £1 billion to our existing £2 billion five-year term loan facility. However, given the increase in the quantum of Notes being issued, we do not currently plan to progress this potential extension to our loan facility, while still having the option to do so at a later time if required.”

The Bond Offering is expected to close on October 21, 2020 and the proceeds will be escrowed and will be available to Rolls-Royce upon successful completion of its Rights Issue. (£1.00 = €1.10 or pound dollar US$1.29 at time of publication.)