Rolls-Royce chooses to pay off AirTanker stake for £189m as it appears to dent its debts
- Rolls to sell 23.1% stake to Equitax for £189m in efforts to pay off its debt
- It aims to raise £2bn to pay off debt that has piled up during the pandemic
- It continues to hold an interest in AirTanker Services, supplier to the Royal Air Force
- Rolls continues to face pressure from major shareholder Causeway Capital
Rolls-Royce has agreed to sell its 23.1 percent stake in aircraft engine manufacturer AirTanker Holdings for £189 million.
The British tech giant said the sale to Equitax Investment Management would enable it to pay off some of its debts incurred as a result of the pandemic.
Rolls-Royce, which will continue to hold a 23.5 percent stake in AirTanker Services, is looking to raise £2bn to restore its balance sheet.
Roll-Royce under pressure to raise £2bn to pay off its debt after the pandemic
AirTanker Holdings is a joint venture between Airbus, Babcock and Thales and owns 14 A330 tank jets.
The company AirTanker Services, in which Rolls-Royce will continue to hold a stake, operates the 14 jets mainly used by the Ministry of Defence.
Rolls-Royce will continue to service and maintain the fleet of its engines powering Voyager aircraft in support of the Royal Air Force.
Tom Bell, president of Rolls-Royce Defense, said: “Through our continued ownership position in AirTanker Services, the Royal Air Force can rely on us to support its mission-critical operations with our derivative Trent 700 engines.
“The sale of our stake in AirTanker Holdings is another important step towards achieving our group target of generating at least £2 billion from divestments, as announced last year, to help rebuild our group balance sheet to support of our medium-term ambition to return to an investment grade credit profile.’
The tech giant continues to hold a 23.5% stake in AirTanker Services
The £189 million deal includes the repayment of shareholder loans and accrued and deferred interest of approximately £47 million, and is expected to close by the end of the first quarter of 2022.
Rolls is under pressure from US-based activist shareholder Causeway Capital, who last month demanded a shakeup of the board.
In response, Rolls-Royce gave a vigorous defense of its Power Systems business amid suggestions from its largest shareholder to sell the division.
Rolls-Royce Shares were flat at 109.4p at 11am today.