Aston Martin nets more than £120 million from bonds

It issued the bonds to raise much-needed cash.

By: Dominik Wilde

Sep 26, 2019 at 3:40am ET

Comment

Aston Martin has managed to raise $150 million (around £121 million) from a recent bond issue, and has the option of raising another $100 million (£81 million).

The short-term financing comes as the company grapples with Brexit uncertainty and the ongoing slump in Chinese demand, and the company's CEO Andy Palmer said that the bonds would also address financial concerns as well.

"Taking this debt on – short-term debt – is the correct tool to completely remove that thesis that we don't have sufficient liquidity," Palmer said on Wednesday, per Automotive News Europe. "In every substantial and material way, this ensures that we can get through to DBX in spite of what all of those global uncertainties might throw at us."

It isn't all positive though, with Aston Martin's chief financial officer Mark Wilson predicting that difficulties will continue.

"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," he said.

The bonds will be repaid with 12 percent interest by 2022, while the proposed additional $100 million will be repaid at an interest rate of 15 percent.

Tell us what you think!

View

Comments

"These rates are very high and are a major red flag that investors consider the car company to be a high risk entity," said broker AJ Bell, with Jefferies analysts adding that the scheme amounted to "expensive short-term de-risking."

Aston Martin made a loss in the first half of the year after failing to match sales forecasts, and sales prices closed at £5.75 on Tuesday – down from the £19 they were first listed at a year ago. Ratings agency Standard & Poor's also dropped the company deeper into the 'junk' rating, to CCC+, earlier this week amid ongoing Brexit concerns as well as worries over potential tariffs from the US. The agency also said that it felt Aston Martin had reached the limit of the debt it could sustainably service, but the company's ambitious growth strategy – which includes the launch of its first SUV, the DBX – was a positive sign.

Analysts have predicted a net revenue of £1.1 billion, with an adjusted profit of £208 million, even though the company's debt will have interest of around £5 million on it this year.