Cobham raises around £500m in latest rights issue

Cobham has raised roughly £500m as investors took up almost all of their rights in a deeply discounted, two for five share issue, the second capital raising by the defence equipment company in less than a year.

All but two percent of the issue at 75p a share was taken up, with underwriters BofA Merrill Lynch and J.P.Morgan Cazenove and Barclays finding buyers for the 13.6m outstanding shares.

The successful fundraising will be a relief to Cobham, which – just days after announcing the latest rights issue – found itself the focus of an investigation by the Financial Conduct Authority for the manner in which it had handled sensitive information ahead of a previous £500m fund-raising in 2016.

The company, which has issued a trove of profit warnings over the last two years, will use the cash to pay down debt. It has said that without the funds there was a risk it could breach debt covenants. New chief executive David Lockwood, appointed in December to turn round the struggling group, has also said the funding was necessary to bolster customer confidence in a company which works on large, sensitive defence contracts.

In February the group revealed a £150m charge for a troublesome contract to
Provide aerial wing refuelling technology on the KC-46 tanker being developed by Boeing for the US Air Force.

It also booked a £546m impairment charge against many of the other businesses acquired in an ill-judged acquisition spree under previous management.