UNITED KINGDOM – Aston Martin, a British independent manufacturer of luxury sports cars and grand tourers has received a a 500-million-pound cash injection from investors led by Canadian billionaire Lawrence Stroll.
Analysts say that the new cash injection will help stabilize the finances of the the cash-strapped vehicle manufacturer even as it moves ahead with plans to produce its first sport utility vehicle (SUV).
Stroll agreed to buy up to 20% of the 107-year-old company and will become the Executive Chairman of James Bond’s automaker of choice, which has gone bankrupt seven times in its chequered history.
Reuters reported that a consortium led by Stroll will invest 182 million pounds ($239 million), whilst major existing shareholders – primarily Italian and Kuwaiti private equity groups – will be part of a rights issue to raise 318 million pounds.
“It likely gives them enough liquidity to tide them over for a couple of years,” said Charles Coldicott, Redburn equity research analyst.
Outgoing chairwoman Penny Hughes, spelt out the degree of trouble the firm has been in after core sales fell last year.
“The difficult trading performance in 2019 resulted in severe pressure on liquidity which has left the company with no alternative but to seek substantial additional equity financing,” she said.
Hughes had further said that without additional funds, Group’s balance sheet was not robust enough to support its operations.
After being given additional funding, Aston will now need to turn the financial lifeline into part of a sustainable plan as it delays investment in electric vehicles and cuts its operating costs.
A key future milestone includes around 1 billion pounds worth of debt due to mature in 2022.
Aston Martin is also suffering from lower gross margins compared to its rival Ferrari, according to analysts at Jefferies, who have said for the car maker to remain viable scaling up is just as important as extra capital.
Aston Martin’s late entrance in to the lucrative SUV market is seen as Key to the company’s success despite the fact that it would be trailing many of its rivals such as Volkswagen-owned Bentley and BMW’s Rolls-Royce.
Aston has so far built a new factory in Wales to make the SUV model, known as the DBX, which it hopes will attract more women to the brand and some buyers to purchase both it and a vehicle from its traditional line-up.
With the DBX model not due to roll off the production line until the second quarter of this year, the firm has taken the cost with only some of the benefit so far.
Aston has however revealed that it already had around 1,800 orders for the car which will retail for 158,000 pounds in Britain, a “materially better” rate than for any previous models.
