FTSE 250 listed Aston Martin to raise £500 million in a rescue deal

As per media reports, the sports car maker, Aston Martin Lagonda Global Holdings PLC (LON:AML), is set to get fund inflow of £182 million from consortium led by Canadian Formula 1 billionaire Lawrence Stroll, who is the owner of the F1 team Racing Point.

The luxury carmaker attempts to raise £500 million with the help of Lawrence Stroll. These funds shall be raised in two tranches. According to the deal Mr Stroll and his consortium shall provide the company with £182 million against a stake of 16.7 per cent in the group at a price of £4 per share.

In the second tranche, the luxury car maker shall raise a further £318 million through issuance of rights after declaring its results in the approaching months. Following the rights issue, Mr Stroll is likely to see his stake rise to 20 per cent in the company.

JCB chairman Anthony Bamford, who is a part of Mr Stroll’s consortium shall also finance Aston Martin with £55.5 million as short-term working capital. The company announced that the money will be repaid once the placement of shares is complete. By successfully closing of this deal, the luxury car maker will no longer be required to draw $100 million of high-interest debt.

The sports car maker witnessed difficult trading performance in 2019 and the company went into severe liquidity crisis. Therefore, the company had to seek substantial amount of additional equity financing. The Group doesn’t possess a sound balance sheet. In addition, the sales of the group were hit by oversupply at dealerships and a series of cost cutting measures adopted by the company.

As a part of the move made by the automobile companies across the world, the sports car maker planned for launch of electric vehicles. But due to these circumstances, the company shall delay its investments in the development of electric vehicles and has simultaneously postponed the release of many supercars until 2022. On the technological front, the company is in the development phase of its V6 hybrid engines, which are being manufactured in the United Kingdom and shall help reduce carbon emissions from its cars. As of now, the car maker deploys V8 and V12 engines in its cars.

Business overview: Aston Martin Lagonda Global Holdings PLC

Aston Martin Lagonda Global Holdings Plc (LON:AML), headquartered in Gaydon/UK, is a leading luxury brand focused on the design, engineering and manufacturing of luxury sports cars. It was formed post-merger of Aston Martin and Lagonda. Both brands have a history of over 100 years. AML has a long tradition of extraordinary design, manufacturing and engineering of luxury sedans and sports cars. The company is creating and exporting cars in more than 50 countries around the world. The company is having four regional offices located in the Asia Pacific, China, Europe and the Americas.

Aston Martin Lagonda Global Holdings PLC issued a Trading Update for FY19

The Group announced a trading update for the financial year 2019 on 7th January 2020. In core retail, the Group’s sales surged by 12 per cent against the same period of last year. The Group expects adjusted EBITDA to be in the range of £130-£140 million in the financial year 2019, with an associated margin in the range of 12.5-13.5 per cent.

The wholesales plunged by 7 per cent to 5,809 during the period as compared with the corresponding period of the last year. Therefore, the UK, APAC, and Americas regions performed widely in-line with the volume anticipations, while Europe region underperformed. Vantage performance enhanced in the fourth quarter of the fiscal year 2019, backed by retail financing mainly in the US and the UK.

 This reflects higher than expected retail and client financing assistance; softer core model mix weighing on average selling price through a shift towards Vantage; decline in the anticipated wholesale volumes and associated forex headwinds. At the year-end 2019, cash balance stood at £107 million.

The Group’s net debt and leverage will be in the range of £875-£885 million and 6.9x-7.6x, respectively. The company during the trading period witnessed challenging conditions in December of year 2019, being the peak period for delivery, which resulted in lower sales, higher selling costs and lower margins in the November of financial year 2019. Presently, the company has exceeded the several conditions to be able to draw the further USD 100 million of April 2022. The Group is expected to announce its fiscal year 2019 results on 27th February 2020.

Aston Martin Lagonda Global Holdings PLC’s Share price performance

(Source: Thomson Reuters) Daily Chart as on Jan-31-20, before the LSE market close

At the time of writing at 02:27 PM Greenwich Mean Time, on 31st January 2020, the shares of Aston Martin Lagonda Global Holdings PLC were trading at a current market price of GBX 485.50 per share, which were up by 20.56 per cent from the last closing price on the previous day. While writing, the group’s market capitalisation was approximately GBP 912.98 million.

The shares of Aston Martin Lagonda Global Holdings PLC traded at a high-price mark of GBX 1,374.40 on 27th February 2019 and at a low-price mark of GBX 371.10 on 15th August 2019 in the last twelve-month period. The Group’s shares were trading at 30.83 per cent higher than the last twelve-month low-price mark and at 64.68 per cent lower from the last twelve-month high-price mark as can be seen in the price chart at the current trading level.

While writing, the stock’s traded volume stood at 4,501,462. The stock’s 5-day daily average traded volume of the Group was 507,744.40; 30 days daily average traded volume- 985,589.33 - and 90-days daily average traded volume – 853,034.38. The beta of the Group’s stock was recorded at 1.92, which indicates higher volatility.Â

The Group’s shares have generated a negative return of 6.24 per cent in the last quarter. Also, from the start of the year to till date, the Group’s stock was down by 22.53 per cent. Since last month, the Group’s stock has given investors a negative return of 22.88 per cent.Â