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Here’s Why Rolls-Royce Share Price Fell 10%

Updated 1 Oct 2020
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Shares of Rolls-Royce Holdings PLC (LON: RR.) fell 10% today after the company confirmed plans to raise a total of 5 billion pounds to improve its balance sheet.

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“The capital raise announced today improves our resilience to navigate the current uncertain operating environment,” Chief Executive Warren East said on Thursday.

The amount of 2 billion pounds is expected to come from its shareholders. Shares fell as initial media reports were centered around a 3 billion pound capital raise.

The company registered cash outflows of 4 billion pounds this year. The plan is to return to profit during the second half of next year.

Rolls-Royce, one of the world’s largest engine makers, is paid based on the number of hours its engines fly. The rights issue will be a major point at the shareholders’ general meeting scheduled for October 27.

Rolls-Royce stock price fell 10% on capital raise October 2020

Given that the international travel industry collapsed amid the pandemic, shares fell to 17-year lows. Rolls-Royce share price fell over 46% in September.

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