Cobham bounced into £500m rights issue after wireless disaster

DEFENCE firm Cobham will go cap in hand to investors for an emergency £500 million cash boost after a shocker at its wireless unit pushed it towards a bank loan breach.

The company has fired management and other staff at its wireless division, which makes products for customers like Vodafone and Telefonica, after unearthing a series of “operational issues” following a review last month.

“We have a tactical issue in the wireless business. It’s extremely unfortunate. We’re not happy about it,” chief executive Bob Murphy said.

The problems caused a product shipment delay and will result in a £9 million one-off charge. Trading profits were down to £15 million for the first quarter from £50 million last year.

Cobham’s bankers will launch a £500 million rights issue before June to help slash its debt pile. Without the cash injection, debt would have breached the level agreed with banks. The board had considered seeking a waiver to the loans or a fire sale of parts of the business but a rights issue cuts debt more quickly.

Cobham, which makes oxygen supply kit for astronauts, saw its shares slump nearly 20%, 41.7p to 173.5p.