Rolls-Royce Holdings Plc agreed to sell its ITP Aero unit in Spain to a group led by Bain Capital for 1.7 billion euros ($2 billion), netting the British jet-engine maker much-needed cash to help it recover from the coronavirus crisis.

The sale to Bain, JB Capital and Spanish defense firm Sapa will help Rolls rebuild its balance sheet, the key to restoring an investment-grade credit rating, according to a statement Monday. The shares jumped as much as 12 percent on the deal and an earlier contract win to upgrade engines on U.S. B-52 bombers.

The ITP Aero sale brings to an end a disposal program announced in August 2020, after the first wave of the virus outbreak grounded flights globally and tipped Rolls-Royce to a record loss. The engine maker was hammered by the crisis, which deprived it of critical maintenance revenue on the large, long-distance aircraft that use its engines.

With ITP and a handful of smaller divestments, the company raised almost 1.8 billion pounds ($2.4 billion), close to the 2 billion-pound target set by Chief Executive Officer Warren East, a spokesman said. Rolls said in August it was near an agreement for a sale of ITP. 

Shares of Rolls were up 8.9% as of 1:24 p.m. in London, where the company is headquartered. With the ITP sale and the up-to $2.6 billion U.S. contract win, the stock reached its highest intraday levels since March 2020 at the start of the Covid-19 crisis.  

Raising Cash

In August, Rolls sold its Bergen Engines unit to U.K.-based Langley Holdings for 63 million euros, after an earlier deal to sell it to a Russian firm raised national security concerns in Norway. 

The company also shed a 23% stake in air-to-air refueling company AirTanker Holdings Ltd for 189 million pounds. A separate nuclear business sold in December 2020 garnered 70 million pounds, Rolls now says.  

Rolls-Royce has also raised cash by selling shares as maintenance revenue dried up and demand for large aircraft plummeted. Long-haul flights are recovering less quickly than shorter routes as vaccine distribution starts to ease the impact on air travel.

ITP Aero was formed in 1989 to make engines for the Eurofighter Typhoon military jet. The unit also worked with Rolls to develop turbines used on Airbus SE and Boeing Co. wide-body aircraft. 

Bloomberg first reported on the prospect of its sale in July 2020. The company subsequently beefed up the arm by moving work there from other divisions to attract buyers.

Bain reached a deal after negotiations that included the Spanish government, which said Monday it trusts that the deal will provide ITP Aero with stability “after two years of uncertainty about the future of the company.” 

ITP Aero will remain based in Zamudio, near Bilbao, and continue to be run by CEO Carlos Alzola. 

The U.S. buyout firm will guarantee workforce levels and has plans for further growth, according to the statement. Bain is also open to adding further Spanish and Basque industrial partners to the consortium, reaching up to 30% of the equity, until the end of June next year. 

The agreement with Bain was reported earlier by Sky News.