Rolls-Royce prices £2bn-equivalent senior notes

NOT FOR PUBLICATION OR DISTRIBUTION IN OR INTO CANADA, JAPAN OR AUSTRALIA.

THIS ANNOUNCEMENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER OR INVITATION TO SELL OR ISSUE, OR ANY SOLICITATION OF AN OFFER TO PURCHASE OR SUBSCRIBE FOR, ANY SECURITIES OF ROLLS-ROYCE HOLDINGS PLC OR ROLLS-ROYCE PLC. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

15 October 2020

ROLLS-ROYCE PRICES £2 BILLION-EQUIVALENT SENIOR NOTES OFFERING

Rolls-Royce Holdings plc (the ""Company" and together with its subsidiaries, the "Group" or "Rolls-Royce") announces that it has successfully priced an offering (the "Bond Offering") of three tranches of senior unsecured notes denominated in US dollars, euros and sterling (collectively, the "Notes") to raise gross proceeds of approximately £2 billion. The Notes will be issued by Rolls-Royce plc and guaranteed by the Company.

The Bond Offering comprises:

·      USD 1,000 million¹ aggregate principal amount of 5.750% Notes due 2027;

·      EUR 750 million² aggregate principal amount of 4.625% Notes due 2026; and

·      GBP 545 million aggregate principal amount of 5.750% Notes due 2027.

On 1 October 2020, we announced our intention to raise gross proceeds of at least £1 billion through a bond offering, as part of a proposed £5 billion recapitalisation package to increase resilience, strengthen the balance sheet and support long-term strategy. Given the strong demand from investors for the Notes, we decided to increase the size of the offering of the Notes issued to approximately £2 billion equivalent.

The recapitalisation package also includes an approximately £2 billion fully underwritten rights issue (the "Rights Issue") and commitments for a new two-year term loan facility of £1 billion. The combination of the proceeds from the Notes, the Rights Issue and the commitments for the new £1 billion term loan facility is expected to provide us with gross proceeds of approximately £5 billion.

As previously announced on 1 October, we have also received support in principle from UK Export Finance for an extension of its 80% guarantee to support a potential increase of up to £1 billion to our existing £2 billion five-year term loan facility. However, given the increase in the quantum of Notes being issued, we do not currently plan to progress this potential extension to our loan facility, while still having the option to do so at a later time if required. 

The Bond Offering is expected to close on 21 October 2020 and the proceeds will be escrowed and will be available to Rolls-Royce upon successful completion of its Rights Issue.

¹ USD 1,000 million is equivalent to GBP 772 million. USD converted to GBP at 1.2953:1 based on the exchange rate on 14^th October 2020 at 11.30am BST.

² EUR  750 million is equivalent to GBP 680 million. EUR converted to GBP at 1.1037:1 based on the exchange rate on 14^th October 2020 at 11.30am BST.

IMPORTANT NOTICES

Certain statements made in this announcement are forward-looking statements. Such statements are based on current expectations and assumptions and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results expressed or implied in these forward-looking statements. Persons receiving this announcement should not place undue reliance on forward-looking statements. Unless otherwise required by applicable law, regulation or accounting standard, the Group does not undertake to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

This announcement is not an offer of securities for sale in the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements under the Securities Act. There is no intention to register any securities referred to herein in the United States or to make a public offering of the securities in the United States. Any decision to invest in the Notes offered in the Offering must be made solely based on the information in the offering memorandum relating to the Notes.

This announcement is for informational purposes only and is directed only at persons who are: (a) persons in member states of the European Economic Area (the "EEA") who are qualified investors (as defined in Regulation (EU) No. 2017/1129); (b) persons in the United Kingdom who are qualified investors and who are (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); or (ii) persons falling within Article 49(2) (a) to (d) of the Order ("high net worth companies, unincorporated associations, etc."); or (iii) persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any senior secured notes may otherwise be lawfully communicated or cause to be communicated (all such persons in (a) and (b) together being referred to as "relevant persons"). This announcement must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this announcement relates is available only to relevant persons and will be engaged in only with relevant persons.

LEI: 213800EC7997ZBLZJH69

For further information, please contact:

Media

Richard Wray

Director of External Communications & Brand,

Rolls-Royce Holdings plc

Tel +44 (0) 7810 850055

[email protected]

Investors

Isabel Green

Head of Investor Relations,

Rolls-Royce Holdings plc

Tel +44 (0) 7880 160976

[email protected]

www.Rolls-Royce.com