Aston Martin announces $660 million rights issue backed by Saudi Arabia's PIF

The fundraising will allow the car maker to lower its debt and invest in new models

An Aston Martin car on display in Beijing, China. The brand is one of the key names in British sports car history and a byword for luxury. Reuters
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Luxury car maker Aston Martin has announced a £575.8 million ($660m) rights issue, with the backing of investors that include Saudi Arabia's Public Investment Fund, Mercedes-Benz and the Yew Tree Consortium.

The company will issue 23.3 million new shares to PIF, the kingdom's sovereign wealth fund, at £3.35 a share, giving it a 17 per cent stake, Aston Martin said on Monday in a filing to the London Stock Exchange.

The filing said PIF had committed to take up 100 per cent of its entitlement under the rights issue.

Aston Martin intends to use the proceeds to “repay existing debt, strengthen financial resilience and improve its cash flow generation by reducing its interest costs”.

It will also seek to “maintain a substantial liquidity cushion to underpin and accelerate future capital expenditure, and to support [the] execution of its targets in what remains a challenging operating environment, impacted by the war in Ukraine, Covid-19 lockdowns in China, as well as continued supply chain and logistics disruptions”.

Aston Martin's share price is down about 65 per cent since the start of this year, according to LSE data. In early trading on Monday, the stock price fell more than 6 per cent.

In July, Aston Martin said that its losses in the first-half of the year widened as supply chain constraints hit production, with the company reporting a pre-tax loss of £285.4m in the six months to the end of June, compared with a loss of £90.7m a year ago.

The company sold 2,676 vehicles during the first half of the year, 8 per cent less than in the same period in 2021.

The Yew Tree Consortium is expected to take a total equity investment of £105.4m.

Aston Martin said it was focused on increasing profitability and renewing its product offering, including the electrification of its model range.

“We have continued to make strong progress in our vision to become the world's most desirable, ultra-luxury British performance brand during the first six months of 2022, despite supply chain challenges in Q2,” said executive chairman Lawrence Stroll in the car maker's half-year report.

“The underlying fundamentals of Aston Martin have never been stronger, with robust demand across our product range, sports cars sold out into 2023 and DBX orders up by more than 40 per cent compared to 2021.”

Aston Martin is one of the key names in British sports car history and a byword for luxury. Royals, celebrities and fictional spy James Bond are known to love the cars.

Updated: September 05, 2022, 10:08 AM
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