Cobham in cash call to tackle debt

By Dominic O'Connell
Today business presenter

Image source, PA
Image caption,
The Lockheed Martin F-35 Lightning II uses more than 100 Cobham components

The aerospace company that pioneered in-flight refuelling has asked shareholders for a £500m injection to repair its finances - the second such cash call in just eight months.

Cobham unveiled the rights issue plan alongside a disastrous set of results.

The firm is still trading profitably and made a £225m operating profit.

But it was thumped heavily into the red after it wrote down the underlying value of its business. It declared a statutory pre-tax loss of nearly £850m.

Cobham - whose founder, Sir Alan Cobham, was one of the pioneers of British aviation - has annual sales of £2bn.

The rights issue will be a blow to shareholders, who were stunned last June when the company asked for another £500m. It then said the money would put it on a "sound financial footing".

Analysts were puzzled when the company did not cancel its dividend payment to shareholders - worth £125m a year - at the time.

With the latest rights issue - which has been underwritten by a group of investment banks, meaning the company is sure to get the money even if investors decline to put more money in - the dividend has been scrapped.

Cobham chairman Michael Waring said while there had been significant management change in recent months, there would be more to come, promising "a rolling programme of board changes over the next two years".

David Lockwood, chief executive since last summer, said he was confident Cobham could be "reinvigorated over time".

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