Just five months after declaring Aston Martin Lagonda Global Holdings Plc had plenty of cash, Chairman Lawrence Stroll announced plans to raise £653 million ($772 million) to pare debt and free up money for future product.
The carmaker intends to issue 23.3 million new shares to the Saudi Public Investment Fund at £3.35 a share, giving it a 17% stake, Aston said in a filing. The company will also undertake a rights issue with the PIF, Stroll’s Yew Tree Consortium and Mercedes-Benz AG investing a combined £335 million.
“With this capital raise, we are able to remove the significant overhang on our business,” Stroll said on a conference call. As much as half of the proceeds will be used to repay debt and reduce interest costs, with the rest providing a cushion amid the war in Ukraine, Covid-19 lockdowns in China and supply chain and logistics challenges.
The moves mark a stark reversal from Stroll’s position earlier this year, when he told reporters: “Let me be crystal-clear, black-and-white: we do not need money.” On Friday, he said the Aston’s progress had been slowed by legacy issues inherited from previous management and the downturn in China.
Aston shares climbed as much as 28% in London trading, their biggest intraday jump since May 2020.
What Bloomberg Intelligence Says
Aston Martin’s £653 million capital raise adds Saudi’s PIF as a 17% shareholder and a subsequent £575 million rights issue de-leverages the balance sheet to allow an unhindered relaunch of the sports-car range from 2023. Net debt will be halved and removes some eye-watering 13.5% coupon rate notes, with cash burn only now ending in 2024 rather than 2023. Guidance for 2022 and 2024-25 was reiterated.
— Michael Dean, BI automotive analyst
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Aston considered and rejected a £1.3 billion equity investment proposal from Investindustrial Group Holdings and Geely International Ltd. The British carmaker’s board said it believes the offer overestimated the company’s capital requirements, would have heavily diluted existing shareholders and been difficult to execute. Investindustrial, the Italian private equity firm, was one of Aston’s top investors prior to its 2018 initial public offering.
Pitched at the time of its London listing as a peer to Ferrari NV, Aston’s struggles have sent its shares plummeting 97%. The carmaker was forced in 2020 to seek a rescue by Stroll, who’s injected cash and forged closer ties with Mercedes. In May, Aston named Ferrari veteran Amedeo Felisa its chief executive officer to replace Tobias Moers, whom Stroll hired away from Mercedes’s performance division AMG two years ago.
Aston expects to complete the capital raise by the end of September. While the company reaffirmed its outlook for the year, it did say supply-chain disruptions affected initial deliveries of the DBX 707, a high-performance version of its sport utility vehicle, in the second quarter.
Stroll said he was “extremely confident” about meeting targets.