Aston Martin increases cash injection by £36mln as coronavirus hits market
Aston Martin Lagonda Holdings PLC (LON:AML) shares tumbled on Monday as the carmaker increased the size of its bailout package amid a coronavirus-induced market slowdown.
In an announcement late last Friday, the company said the total size of its cash injection had increased by £36mln to £536mln to reflect what it said were “increased uncertainties” since the package was first untiled on 27 February.
The funds are coming from a consortium led by Canadian tycoon Lawrence Stroll, the owner of the Racing Point F1 team which is due to change its name to Aston Martin F1 for the 2021 season.
As part of the amended deal, Aston said Stroll’s consortium will now receive a 25% stake in the firm for £171mln through a placing at 225p per share, as opposed to the previous agreement to raise £182mln at 400p per share for a 16.7% stake in the firm.
A subsequent rights issue underwritten by major shareholders Prestige/Strategic European Investment Group (SEIG) and Adeem/Primewagon will raise the remaining £365mln.
‘Significant challenges’ ahead
The decision by the company to increase the funding package came as Aston warned the escalating coronavirus outbreak had “impacted consumer demand” in China and its Asia-Pacific markets and had “the potential to do the same” in other territories.
As a result, the firm said there were “increasing uncertainties and risks” around its financial performance for 2020.
Andy Palmer, Aston’s president and chief executive, said there had been “no disruption to production to date” and trading in the first two months of the year had been generally in line with the group’s expectations.
However, he added that the coronavirus was creating “increasing uncertainty” and the company was taking action to safeguard its business over the “extremely volatile period”.
Stroll said that despite the “significant change in the global market environment”, his consortium was still committed to “provide the company with the necessary funding it needs to manage through this period”.
“Whilst the immediate outlook looks increasingly challenging, I remain fully committed to the future of Aston Martin Lagonda and look forward to implementing our plans once the fundraising is complete”, he added.
Investors were less upbeat, however, as the shares plunged 33.7% to 136.5p in mid-morning trading.