ASTON Martin – the favourite car maker of a certain fictional secret agent – has been forced to turn to a different kind of bond, raising $150m to boost its struggling financial position, it was revealed today.
The UK-listed business has been struggling to hit targets in recent months, but bosses hope to use the extra cash, equivalent to some £121m, to help develop and build its first SUV – the DBX.
However, Aston Martin will now be under extra financial pressure, as the bonds come with a 12 per cent interest rate paid each year until April 2022. At that point, the company must repay the full amount.
Shares dropped more than five per cent – down 29.4p to 545.4p – after the announcement. It listed on the stock market a year ago at 1,900p a share but suffered a shock profit warning in June and heavy criticism after the float costs were revealed to be £136m.
The high rates come after ratings agency Moody’s cut Aston Martin’s credit rating, blaming a ‘lack of progress in terms of volume growth and profitability for 2019’.
Mark Wilson, Aston Martin Lagonda chief financial officer, said: ‘At the [half-year] results we highlighted that we expected macroeconomic headwinds and uncertainty to continue.
‘These circumstances require flexibility in our financing arrangements to ensure that resources are available to deliver the Second Century Plan.
‘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.
‘Aston Martin’s first SUV, the DBX, remains operationally on track, and we are very pleased with the reception the car received at Monterey Car Week during August.’
He added that its £3m Valkyrie hypercar sold out – 150 were built – and there was ‘excess customer demand’ for its £1m Valhalla cars.
Russ Mould, investment director at AJ Bell, said: ‘The car manufacturer is known for its high-end prices and that situation now also applies to its debt.
‘Aston Martin is taking on 150 million dollars of extra borrowing with a 12 per cent interest rate, as well as an option to have another 100 million US dollars at 15 per cent.
‘These rates are very high and are a major red flag that investors consider the car company to be a high-risk entity.’