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Aston Martin unveils £576m rights issue

Aston Martin shares 75.1p (15.64%) to 404p slid after the luxury car maker confirmed a £575.8m rights issue at a price of 103p per share, a discount of 78.5% to the closing share price on Friday.

The issue is supported by chairman Lawrence Stroll and Saudi Arabia’s sovereign wealth fund, but failed to excite the market.

“For what’s meant to be a premium brand, Aston Martin is behaving like a desperate start-up company, going cap in hand once again to shareholders asking for more money,” said Russ Mould of AJ Bell. “Its offering of shares at a 78.5% discount to last Friday’s closing price shows how desperate it is to secure new funds,”

“While it says the new money should help it achieve strategic goals, this might simply be Aston Martin finding another piece of frayed rope to keep it afloat and avoid sinking completely into quicksand. The key question is for how long the rope will stay intact before the company needs help again.

“The car manufacturer has been a flop since joining the stock market and one has to wonder if it would be better off as a privately-owned company.”

Aston Martin DB11

Aston Martin Lagonda is raising £575.8 million in a fully underwritten rights issue as part of the previously announced equity raise of c.£653.8m (before expenses).

Up to half the fund-raising will be used to pay down a significant debt burden following a refinancing of the company in 2020 due to a debt in its fortuned during the COVID-19 pandemic.

The group said it is now at the beginning of the second phase of its transformation, which is focused on increasing profitability and renewing its product offering, including electrification of its model range “which is fundamental to its future success and growth strategy”.

This process should support significant improvements in gross margin and meaningful EBITDA growth, as well as a reduction in leverage.

The fund-raise involves the placing of 23.3 million new ordinary shares at a price of 335p per share to raise approximately £ 78m.

A 4-for-1 rights issue of 559 million new shares at a price of 103p will raise gross proceeds of approximately £575.8m, a discount of 78.5% to the closing price on 2 September. It is a 42.3% discount to the theoretical ex-rights price of 178p per new share calculated by reference to the closing price on the same basis.

The company said it has received irrevocable undertakings from shareholders representing 33.7% of the issued share capital.

Mercedes-Benz AG will see its 11.7% holding diluted to 9.7%.

FTSE 100 closes higher

London’s blue chip FTSE 100 index edged higher at the close to finish the session 6.24 points up at 7,287.43.

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Global markets

Oil prices rose this morning as investors eyed possible moves by OPEC+ producers later today to cut output and support prices.

Brent crude futures rose $1.88, or 2%, to $94.90 a barrel by 0345 GMT after gaining 0.7% on Friday. US.West Texas Intermediate crude was at $88.60 a barrel, up $1.73, or 2%, following a 0.3% advance in the previous session.

The Organisation of the Petroleum Exporting Countries and allies including Russia, known as OPEC+, meets as demand faces headwinds and supply could be boosted by returning Iranian crude if Tehran secures a deal with world powers on its nuclear work.

Iran is expected to add 1 million barrels per day to supply or 1% of global demand if sanctions are eased although the prospect for securing a nuclear deal looked less clear on Friday.

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