Aston Martin Lagonda has received a large investment from Saudi Arabia as part of raising £ 650 million in capital to pay off the big debts of the luxury sports car manufacturer.
The British manufacturer has not been able to generate the money needed to invest in new models and electrical technology, and has also struggled with the delays of its Valkyrie hypercar and its newest DBX 707 sports utility vehicle.
The Saudi Public Investment Fund (PIF), led by Crown Prince Mohammed bin Salman, will buy shares worth £ 78 million and participate in a £ 575 million rights issue that will make it the second largest investor after Yew Tree, the leading consortium. of billionaire fashion mogul Lawrence Stroll who took over Aston Martin in early 2020 as he approached bankruptcy.
Aston Martin shares hit an all-time low below 355p on Friday after the deal was announced, before recovering some of this week’s losses to rise 20% to 445p. Its stock market value had fallen from £ 1.6 billion earlier this year to just £ 432 million on Thursday evening, amid lingering concerns from investors about its financial health.
Bin Salman, the de facto leader of Saudi Arabia, is president of the PIF. U.S. intelligence has blamed him for the 2018 murder of Washington Post journalist Jamal Khashoggi. The assassination impacted the international community and caused a crisis in the kingdom’s diplomatic relations.
When asked about the suitability of the Saudi regime for investing in a British public company, Stroll, who serves as chief executive, insisted he was “very comfortable” with the PIF, citing the investments he has in other companies. ” first level “. and carmakers such as electric startup Lucid and rival British sports car maker McLaren.
Fundraising will represent another effort by Aston Martin to put itself on a stable footing after years of struggles as a company listed on the FTSE 250. In May, Stroll appointed former Ferrari boss Amedeo Felisa as third CEO in three years to try to revive his image as an exclusive sports car maker, favored by James Bond in the spy movie franchise.
The carmaker will use up to half of the new capital to pay off the debt, which costs it £ 130 million a year in interest.
The rest of the capital will give the carmaker a “substantial liquidity cushion to prop up and accelerate future capital spending,” amid what he described as a “challenging operating environment, affected by the war in Ukraine, the Covid blockades -19 in China, as well as supply chain continuity and logistical disruptions. ” Sales in the first half of the year were down 8% from 2021, to 2,676, due to problems, but he said he expected things to improve in the second half of the year.
Yew Tree’s stake will drop from 22% to 18.3% and the PIF will be entitled to two seats on Aston Martin’s board. Current shareholder Mercedes-Benz will also invest £ 56 million.
The carmaker also turned down a much larger £ 1.3bn investment offered by a consortium of Chinese carmaker Geely, which also owns Lotus UK, Volvo Sweden and the UK. former owner of Aston Martin InvestIndustrial, which has been criticized by former Aston Martin CEO Andy. Palmer for not allowing the automaker to cash in on the disastrous stock market listing in 2018.
Stroll criticized the offer as a “camouflaged, disguised acquisition … at low cost” that would have provided much more money than the company needed. Geely did not offer to help with electric car technology as part of the deal, he said.
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Stroll did not rule out working with other companies in the PIF portfolio as it prepares to launch its first pure battery car in 2025, but said fundraising was needed primarily to address “inherited problems.”
“I inherited a business that was in deep trouble and had to be completely reinstated,” Stroll said, adding that while the deal would eliminate a “significant overflow” from the business, it had been hampered by the hardships. loan terms agreed in November 2020.
“The only thing I regret is the punitive terms of this funding,” he told reporters. “Since then we’ve had to live with that funding.”