Rolls-Royce could face the ignominy of being kicked out of the blue-chip index if the famed engineer’s shares continue to nose-dive because of the pandemic.
Its shares closed down 5.4pc, or 10.95p, at 192.4p, making it the FTSE 100’s biggest loser. But they hit fresh 16-year lows of 182.6p in intra-day trade amid worries about how long it will take before there is a recovery in the air travel market Rolls derives half its annual revenues from.
Rolls is worth just £3.7bn at current levels, putting it in the bottom five members of the FTSE 100 by value. With the company expected to launch a multi-billion equity raise in the next month or so, seeking to sell chunks of its portfolio and facing further downgrades to its credit rating, the shares could continue to slide, having broken through the resistance level of 200p.
Pressure on the company ratcheted up as it released a statement after trading closed “in response to media speculation” about how it could bolster its balance sheet. Rolls repeated statements from its interim results in August, noting it continues to “review a range of options” such as new debt or equity, but no final decisions have been made.
Potential bid target G4S edged up 2p to 183p as investors mulled over whether another buyer could emerge after privately held Canadian rival GardaWorld revealed it had made three approaches for the UK security business since the summer, the last at 190p.
G4S’s management has dismissed the bids as undervaluing the company, teeing up the prospect of a hostile bid as GardaWorld tries to whip shareholders into action, saying its putative bid represents a 30pc premium.
However, analysts at Quest have labelled the approach, bankrolled by BC Partners, the private equity firm which owns 51pc of GardaWorld, as “outrageously low”. Quest said its model valued G4S at 303.9p a share.
Down among the mid-caps, feeling more positive was oil and gas exploration and production company Energean. News that it had signed two gas sales contracts for its Karish development in the eastern Mediterranean made it the FTSE 250’s biggest riser, gaining 106.2p to 629p. The agreements cover sales of 1.4bn cubic metres (bcm) of gas a year, taking the total contracted sales to 7bcm a year from Karish.
Another top mid-cap performer was Royal Mail, up 12.3p at 242.3p, on hopes that the postal sector will be a pandemic winner as consumers continue to shop online. It got a boost from news US peer FedEx had delivered blockbuster quarterly numbers and is predicting the busiest Christmas period in its history.
The FTSE 250 slipped 0.1pc to 17,795.26, while the FTSE 100 edged down 0.4pc to 6,078.48.