Cobham looking to raise £506.7m in rights issue

FTSE 250 defence and aerospace group Cobham is looking to raise £506.7m in a one-for-two underwritten rights issue.

The company will issue just under 569.3m shares at 89p per share, which is a 45.4% discount to the closing price on 31 May.

The rights issue is fully underwritten by Bank of America Merrill Lynch and Jefferies International and is not subject to shareholder approval.

Chief executive officer Bob Murphy said: “"The rights issue will put Cobham on a sound financial footing by reducing gearing towards its target of below 2x net debt to EBITDA. The board confirms the outlook for the year ended 31 December 2016 remains consistent with the 26 April 2016 announcement.

“We remain confident that continued investment in technology and know-how will enable us to maintain our leading positions in specialist markets with good prospects leaving Cobham well placed to deliver growth over the medium term."

Cobham proposed the rights issue back in April, when it reported a big slump in first-quarter profit.

The company attributed the slow start to the year to operational issues in the Wireless business resulting in delayed shipments and a one-off charge of £9m.

It also pointed to increasing headwinds in the commercial fly-in fly-out business and cost increases on a small number of development programmes in the Advanced Electronics Solutions Sector.

At 0818 BST, shares were up 1.2% to 164.90p.