Aston Martin boosts cashflow by £120 million through bonds

Aston Martin DBX prototype

Bond issuing announcement comes in the wake of disappointing financial results for the first half of 2019

Aston Martin has announced it has raised £120 million by issuing bonds as it seeks to improve its financial position.

News agency Reuters claims that a second round of bonds worth about £80m could be issued if the company meets its order targets, and if it decides it needs additional cash.

The 12% notes issued will mature in 2022, while the ones it has the option of issuing if it needs more funding could return up to 15%.

The announcement comes in the wake of disappointing financial results. Aston Martin notably posted a £78.8 million pre-tax loss during the first half of 2019, and its top executives expect they’ll continue sailing through choppy waters for the foreseeable future.

The factors contributing to Aston Martin’s losses include lower-than-expected sales in Europe and the high cost of expanding the company’s footprint into new segments of the market, including some it has never competed in before.

“What we have announced today is a cost-and-time-effective structure that immediately strengthens our liquidity in the short term and the option to draw further funding as we successfully execute the plan,” explained Mark Wilson, the company’s chief financial officer, in an interview with Reuters.

Aston Martin stock alarmingly dipped to about £8 per share when it issued a profit warning in July 2019. Its valuation slowly recovered in September as its stock crept up, but shares dipped back down to £5.40 after the British car maker announced its decision to issue bonds. Stock traded at £19 when it was first floated on the stock market in October 2018. Financial uncertainties have cost the company billions of pounds in less than a year, much to the chagrin of investors.

While Aston Martin predicts it will continue to face headwinds, it’s seemingly confident the immense amount of money it’s investing into expanding its range of models will pay dividends during the early 2020s. It’s in the final stages of developing the DBX, an SUV that will most likely become its best-selling model, and is turning the heritage-laced Lagonda nameplate into a sister brand tasked with selling electric luxury cars closer in spirit to the Rolls-Royce Ghost than the DB11.

Read more:

Aston Martin shares slide further after 2019 loss posted

Aston Martin DBX SUV gets 542bhp V8

Aston Martin launches new one-make racing series

Source: Autocar

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