Aston Martin Lagonda (AML) has accepted a lifeline from billionaire Formula 1 magnate Lawrence Stroll, whose consortium will inject £182m into the ailing motor company as part of a £500m rescue package.
Aston Martin has grossly underwhelmed investors since listing, with low demand for its cars undermining an ambitious plan led by former Nissan executive Andy Palmer to boost volumes. The company issued a profit warning earlier this month admitting that its full-year cash profits would sit between £130m and £140m, around a third below market expectations.
Aston shares have lost as much as three-quarters of their value since listing in October 2018 for £19 a share. “The past year has been a regrettably disappointing and challenging time,” Dr Palmer said.
The profit warning also revealed that the early success of its new SUV programme, the DBX, had qualified Aston to draw upon $100m (£76m) of April 2022 notes, at an eye-watering coupon of 15 per cent. This raise will be abandoned under the implementation of the ‘reset’ plan.
Instead, Mr Stroll’s consortium will provide £182m in funding, including £55.5m in short-term working capital support. In return, ‘Yew Tree Overseas Limited’ will secure a 16.7 per cent stake in the company at a price of £4 a share, via a placing of 45.6m shares. “Today's fundraising is necessary and provides a platform to support the long-term future of the company,” Dr Palmer said.
Aston will raise a further £318m via a rights issue after it releases its full-year results next month. Prestige/Strategic European Investment Group and Adeem/Primewagon, who together own around 61 per cent of Aston’s issued share capital, have pledged to vote in favour of the placing and the rights issue.
The pair will collectively own around 50.5 per cent of Aston shares after Yew Tree takes its stake in the company.
Mr Stroll will replace Penny Hughes as executive chairman. "The difficult trading performance in 2019 resulted in severe pressure on liquidity,” Ms Hughes said, “which has left the company with no alternative but to seek substantial additional equity financing. Without this the balance sheet is not robust enough to support the operations of the group.”
Aston plans to use the proceeds from the rescue package to improve its liquidity and support the ramp up of its DBX model. It has elected to delay its investment in electric cars from 2022 to at least 2025. The group will look to make £10m of annualised savings through changes to its operating structure, delivering £7m during 2020.
Having slashed its number of contractors and reduced headcount last year, Aston will make further cuts to the former but add 300 new staff members at its new St Athan site, where it is producing the DBX.
The Yew Tree consortium is expected to comprise a host of executives from a range of industries including automotives and fashion. Mr Stroll will also rebrand his Formula 1 team Racing Point with the Aston Martin brand from the 2021 season onwards. His son Lance competes for the team.
The Financial Times reported yesterday that the Aston Martin board had met to decide over taking Mr Stroll’s offer or accepting a proposal from Chinese carmaker Geely. Aston Martin declined to comment on this story.
