Aston Martin is in last-minute talks with the Canadian billionaire Lawrence Stroll. Reports indicate that the owner of the Racing Point Formula One team and the luxury carmaker are in talks. This is an effort by the carmaker to shore up finances. The company had a less than exciting performance last year. Lawrence Stroll and Aston Martin are said to be in talks to raise £200 million (about $260 million) in a fresh round of financing.
Aston Martin Lagonda Global Holdings Plc. Limited is also in talks with Asian investors. Reports indicate that Li Shufu’s Geely Group is discussing the prospects of the collaboration with the carmaker as well. Geely Group owns majority stakes in the British Lotus and Swedish Volvo car brands. Geely is also said to have a technology-sharing partnership with Daimler A.G where it has a small stake.
Aston Martin Had a Disappointing Financial Performance
Due to its disappointing performance last year Aston Martin had indicated the urgency for fresh sources of funds. These funds will aid debt repayments and finance the production of its new SUV. The DBX is crucial to the British carmaker’s resurrection plans. Aston Martin had already planned to double production to 14,000 cars come 2023. Already, 1,800 orders had come through for it. This is a requirement for getting a $100 million line of credit from lenders.
Aston martin told the sources:
“We remain in discussion with potential strategic investors in relation to building long term relationships which may or may not involve an equity investment.”
Talks are only an indication of interest and may not lead to a successful investment. Aston Martin’s financial performance has been disappointing since its IPO last year. Its bonds though jumped positively on the reports of talks with the Geely Group.
The carmaker indicates the depth of its troubles when its financial results for 2019 were released. The company has little financing options left. Sources indicate that its cash operating balance stood at £107 million.
There May Be Light at the end of the Tunnel
With its financing difficulties, Aston Martin still has the difficult task of raising debt financing. This will bring its debt exposure to over £1 billion. The British carmaker is also set to pay 15% on the new debt that it plans to issue.
Lawrence Stroll made his fortune through investments in luxury brands. These brands include Tommy Hilfiger, Ralph Lauren, and Pierre Cardin. His Global Brands Acquisition Corp. has been his investment vehicle of choice. If all goes well, Lawrence may request for a seat on the board of directors.
Sources also indicate that Investindustrial and Kuwait’s Adeem have a combined stake of more than 60% of the British carmaker. However it turns out, the quintessential British carmaker that broke history last year with its first-ever indigenous IPO still deserves a place in business circles.
If their strategy proves right, they might just pull it off.
At the time of filing this report, Aston Martin Lagonda Global Holdings Plc. stood at £478.1 per share indicating a 2.35% increase in the last twenty-four hours.
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