Saudi fund backs Aston Martin’s £576m rights issue

Luxury car manufacturer Aston Martin Lagonda has confirmed a £575.8m rights issue, supported by chairman Lawrence Stroll and Saudi Arabia’s sovereign wealth fund.

The issue price of 103p per share was nearly 80% below Friday’s closing price of 480p.

It is the final element of a capital raise to repay Aston Martin’s existing debt, improve cash flow by reducing interest costs, and be used for capital expenditure.

In July Saudi Arabia’s Public Investment Fund invested £78m in a share placing and has agreed to take up 100% of its entitlement in the rights issue.

There have been also “irrevocable commitments” from Stroll’s Yew Tree Consortium and Mercedes-Benz AG to take up their full entitlements. The three groups account for 44.7% of the total rights issue.

For Mercedes-Benz, which currently owns 11.7% of shares, is now expected to own 9.7% which takes its total equity investment to £56.1m.

And Yew Tree Consortium, is expected to own 18.3% of shares, taking its shares to be issued in the rights issues for an equity investment of £105.4m.

Since Yew Tree Consortium invested in early 2020, Aston Martin says it has made significant progress to fulfil its vision of becoming the world’s most desirable ultra-luxury British performance brand.

With the successful implementation of Project Horizon, the Group has already achieved a 20% manufacturing cost per unit reduction.
 
Whilst good progress has been made, the manufacturer says the COVID-19 pandemic had a significant detrimental impact on the business in 2020 which led to a refinancing at the end of that year.

This refinancing left the group with a significant debt burden and associated interest costs, something which the capital raise seeks to address.