F1 tycoon leads bail out of troubled carmaker: £500m lifeline for Aston Martin
Aston Martin has been saved from almost certain collapse by a £500m bailout package led by F1 billionaire Lawrence Stroll.
A consortium of investors backed by Stroll will inject £182m into the carmaker in exchange for a 16.7 per cent stake in the firm, whose cars feature in a series of James Bond films.
Stroll, 60, is a collector of vintage Ferraris and described Aston as a ‘gem that needs love’.
In the fast lane: Lawrence Stroll is a collector of vintage Ferraris and described Aston as a ‘gem that needs love’
The other backers include JCB chairman and Boris Johnson donor Anthony Bamford and fashion executive John Idol, the long-running boss of Michael Kors-owner Capri Holdings.
Aston will then raise a further £318m by selling discounted shares to existing investors.
The luxury carmaker will be hoping to draw a line under a dire first 16 months as a listed company that saw its value plunge by almost 80 per cent amid a string of disappointing updates, profit warnings and last-minute loans.
Aston shares raced higher yesterday after it secured the bailout, closing up 23.9 per cent, or 96.1p, at 498.8p.
Although this was a significant surge, it is still a fraction of the 1900p Aston shares were valued at when it listed in an overpriced float in October 2018.
At the time it was worth £4.3 billion. It was valued at just £1.1 billion last night.
Chairman Penny Hughes, who led Aston through the disastrous listing, yesterday said there was ‘no alternative’ to the deal and that without it the company’s balance sheet was not ‘robust enough’ to keep trading.
Stroll will become executive chairman under the plans, unseating Hughes, while his Racing Point Formula 1 team will become the Aston Martin F1 team for at least ten years from the 2021 season.
The Stroll-led consortium intends to take its stake in Aston to 20 per cent after the company completes the £500m cash call. And it will also lend Aston £55.5m of emergency cash to tide it over until the new shares are released, so that it doesn’t have to use a high-interest bank loan.
Aston, which has gone bust seven times in its 107-year history, is pinning hopes of a recovery on the performance of its £158,000 SUV, the DBX, launched in November and going into production in Wales later this year.
And it is also hoping to get a boost from the next James Bond film, No Time To Die, which will feature four of its cars and is released in April. Chief executive Andy Palmer, whose days may be numbered, said: ‘Despite our continued efforts, the difficult trading conditions and resulting poor performance in 2019 has put the company in a stressed position.
Shaken but stirred: Aston Martin’s cars feature in a series of James Bond films
‘Today’s fundraising is necessary and provides a platform to support the long-term future of the company.’
Stroll said: ‘Aston Martin Lagonda makes some of the world’s most iconic luxury cars. Our investment today underpins the company’s financial security and ensures it will be operating from a position of financial strength.’ Stroll, whose personal wealth is estimated at about £2.2 billion, was first linked to the talks in early December, and Chinese car maker Geely was later mooted as a possible strategic investor.
Aston warned earlier this month that its profits for 2019 would come in at a maximum of £140m, a third lower than the City had been expecting.
Under the rescue plans, the company will seek to cut costs by £10m a year and will hold back investments in electric vehicles until at least 2025. These were expected in 2022. It has also pushed back the release of a supercar meant to rival Ferrari until 2022, concentrating instead on its V6 hybrid engine.
Joshua Mahony, senior market analyst at IG, said: ‘Today’s announcement certainly provides some relief for those beleaguered shareholders, yet there are few signs to show that this will do much to turn around the long-term fortunes of this stock.’