F1 boss invests in Aston Martin as firm looks to raise £500m

Struggling Aston Martin is looking to raise £500m after it landed a £183m investment Formula One team boss Lawrence Stroll.

The car maker this morning announced that it will launch a shares issue to raise the remaining £318m. Stroll will join the board of Aston Martin as part of the deal. Chairman Penny Hughes will step down from the board.

Andy Palmer, Aston Martin Lagonda president and Group chief executive, said: “As we announced on 7 January, the past year has been a regrettably disappointing and challenging time for the company.

“Despite our continued efforts, the difficult trading conditions and resulting poor performance in 2019 has put the company in a stressed position with severe pressure on liquidity and affected our ability to deliver against our original plan.

“Today’s fundraising is necessary and provides a platform to support the long-term future of the company. Mr Stroll brings strong and proven expertise in both automotive and luxury brands more widely which we believe will be of significant benefit to Aston Martin Lagonda.

“Following a comprehensive review, today we announce a series of immediate actions to reset, stabilise and de-risk the business, positioning it for controlled, long-term profitable growth. These include rebalancing supply-demand dynamics, reducing capital expenditure and the re-phasing of some future product launches, together with cost-efficiency initiatives.

“We are focused on turning around performance, restoring price positioning and delivering a more efficient operational footprint. We will deliver some exciting new products this year with the much-anticipated DBX during Q2, Vantage Roadster in the spring and Aston Martin Valkyrie deliveries starting in H2.

“We have also announced plans to leverage a new motorsport collaboration with Racing Point to enhance the execution of the plan. I would like to thank Red Bull Racing, who we will continue to sponsor this year, for their partnership and support in us being able to say this today.

“The actions announced today will allow us to implement and deliver on our reset plan and provide Aston Martin Lagonda with a sustainable platform for the future.”

Stroll said: “I am very pleased that I, and my partners in the consortium, have reached agreement with the Board and major shareholders to make this significant long-term investment. Aston Martin Lagonda makes some of the world’s most iconic luxury cars, designed and built by very talented people. Our investment announced today underpins the company’s financial security and ensures it will be operating from a position of financial strength.

“On completion of the £500m of fundraising I look forward to working with the Board and management team in Aston Martin Lagonda to review and improve each aspect of the company’s operations and marketing; to continue to invest in the development of new models and technologies and to start to rebalance production to prioritise demand over supply.

“I, and my partners, firmly believe that Aston Martin is one of the great global luxury car brands. I believe that this combination of capital and my experience of both the motor industry and building highly successful global brands will mean that, over time, we fulfil Aston Martin Lagonda’s potential.”

The news come three weeks after Aston Martin issued a fresh profit warning after what its chief executive called a “very disappointing” year.

The Gaydon-based car manufacturer, which has endured a number of problems after it listed on the London Stock Exchange in October 2018, said the challenging trading conditions highlighted in November continued through the peak delivery period of December resulting in lower sales, higher selling costs and lower margins.

Core wholesales declined 7% year-on-year to 5,809 while core retail sales increased by 12% year-on-year and exceeded wholesale volumes leading to reduced dealer inventory and reversing the trend of the prior year.

Aston Martin said that for 2019, it now expects adjusted EBITDA to be £130m-£140m, below analyst expectations of £200m.