Car maker in cash call
Aston Martin unveils £500m rescue plan and board changes
Driving a deal: ‘2019 has put the company in a stressed position’
Aston Martin Lagonda has confirmed plans to raise £500 million to bridge a cash crisis.
The company will raise £182m through a private placement of 45.6m shares priced at 400p per share.
It will ask shareholders for an additional £318m through a rights issue to be launched after its final results.
The net proceeds from the placing and rights issue will be used to improve liquidity and finance the ramp up in production of DBX and the turnaround of the company’s performance.
Aston Martin Lagonda recently issued a profits warning following a “very disappointing” 2019.
The Midlands-based company, famous for its association with fictional spy James Bond, has struggled since it floated on the London Stock Exchange in October 2018.
Its shares were priced at £19 at the time of the initial public offering and are currently trading around 400p.
A consortium led by Canadian billionaire Lawrence Stroll will acquire a 20% stake in the car-maker.
Mr Stroll is the owner of the Racing Point Formula 1 team and as part of the funding deal he will become executive chairman of Aston Martin.
Penny Hughes, who will step down to make way for Mr Stroll, said: “The difficult trading performance in 2019 resulted in severe pressure on liquidity 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.”
Dr Andy Palmer, President and Group CEO, said: “As we announced on 7 January 2020, the past year has been a regrettably disappointing and challenging time for the company.
“Despite our continued efforts, the difficult trading conditions and resulting poor performance in 2019 has put the company in a stressed position with severe pressure on liquidity and affected our ability to deliver against our original plan.
“Today’s fundraising is necessary and provides a platform to support the long-term future of the company. Mr. Stroll brings strong and proven expertise in both automotive and luxury brands more widely which we believe will be of significant benefit to Aston Martin Lagonda.”
To turn around the company’s performance, key priorities going forward are:
– Controlling production to prioritise demand over supply, to build a stronger order book and regain price positioning;
– Launching DBX in Q2, which has received extremely positive media reviews and a rapidly building order book since opening in November 2019;
– Relaunching Vantage including the Roadster derivative in the spring of 2020 and starting Aston Martin Valkyrie deliveries later in the year;
– Reducing the operating cost base by £10m on an annualised basis, with £7m in 2020, after one-off costs broadly offsetting expected cost increases due to the new St Athan plant; and
– Improving the cash flow profile of the business and transitioning towards a business generating positive free cash flow over the medium term