Aston Martin has announced it has raised £120 million by issuing bonds as it seeks to improve its financial position.
News agency Reuters claims that a second round of bonds worth about £80m could be issued if the company meets its order targets, and if it decides it needs additional cash.
The 12% notes issued will mature in 2022, while the ones it has the option of issuing if it needs more funding could return up to 15%.
The announcement comes in the wake of disappointing financial results. Aston Martin notably posted a £78.8 million pre-tax loss during the first half of 2019, and its top executives expect they'll continue sailing through choppy waters for the foreseeable future.
The factors contributing to Aston Martin's losses include lower-than-expected sales in Europe and the high cost of expanding the company's footprint into new segments of the market, including some it has never competed in before.
"What we have announced today is a cost-and-time-effective structure that immediately strengthens our liquidity in the short term and the option to draw further funding as we successfully execute the plan," explained Mark Wilson, the company's chief financial officer, in an interview with Reuters.
Aston Martin stock alarmingly dipped to about £8 per share when it issued a profit warning in July 2019. Its valuation slowly recovered in September as its stock crept up, but shares dipped back down to £5.40 after the British car maker announced its decision to issue bonds. Stock traded at £19 when it was first floated on the stock market in October 2018. Financial uncertainties have cost the company billions of pounds in less than a year, much to the chagrin of investors.
While Aston Martin predicts it will continue to face headwinds, it's seemingly confident the immense amount of money it's investing into expanding its range of models will pay dividends during the early 2020s. It's in the final stages of developing the DBX, an SUV that will most likely become its best-selling model, and is turning the heritage-laced Lagonda nameplate into a sister brand tasked with selling electric luxury cars closer in spirit to the Rolls-Royce Ghost than the DB11.
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Aston Martin shares slide further after 2019 loss posted
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Looks like their going to enter a death spiral
Looks like their going to enter a death spiral - any car company that bets its whole future on the one next car is in serious trouble
CharlieBrown wrote:
you mean like what Cayenne was to Porsche !
wheels wrote:
Porsche with VW looking after it were not quite in the same position as Aston Martin is
CharlieBrown wrote:
They also had the Boxster and 911 at the same time, legends
DBX front end
Looks like it's just seen the accounts!
Poorly received designs.
Much of the problem comes from the poorly received Marek Reichman designs. They're just not hitting the mark. DB11 technically is excellent, but inside the design is a mess. Externally it is ok.
DBS with that grill and an even bigger mess of an interior doesn't work. And the V8 Vantage is just a mess from start to finish.
Biggest problem Aston face is betting the farm on yet another of his designs. They're already discounting the current models to get sales, Autotrader is awash with new DBSs, and any idea of making a profit from the V8 Vantage scuppered the speculators!
Aston lauchned their IPO as a £4.3bn company and dipped to about £1bn just a month ago. Now they've recovered to £1.3bn and are wanting to effectively borrow 10% of the company's value. These are dangerous times for Aston and the quicker they move away from Marek Reichman and update his designs the better.
Symanski wrote:
It's obvious that these are dangerous times for Aston, and the sooner he leaves Marek Reichmann, the better he can update his projects.But don't forget that it's Aston, the next project will be explosive as always.
Symanski is right...
Marek Reichman's Dali-esque melted-camembert front grill & spoiler of the Vantage is indicative of a company that's off-target in every metric.... And Dr Palmer flogging millions of quids' woth of shares just after the IPO has gone down just as badly as Reichman's styling.
This is precisely what happens when a bunch of financiers map out a model and investment programme which works on paper but is crucially dependent on every model fulfilling its sales brief when the human resources (and expertise) of the company have never developed an integrated range of Aston sports cars in the history of the company.....because the company has never had one before !! How easy it must seem to emulate Porsche forgetting the folks from Zuffenhausen have had 50 years of practice and even they got it wrong occasionally.
This kind of 'small beer' cash injection must mean that AM is living from hand to mouth. Dr Palmer might be a lovely bloke but on this evidence he's out of his depth.