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(Alliance News) - Aston Martin Lagonda Global Holdings PLC said Friday it plans to sell new shares totalling up to 19.99% of its current issued share capital in an attempt to secure enough cash to "successfully emerge from the extended Covid-19 lock-down".
The price at which the shares are to be sold will be determined at the close of the bookbuilding process, the luxury carmaker said.
The institutional placing will be run by Barclays, JPMorgan, Morgan Stanley and Deutsche Bank. A retail offer also will be made via PrimaryBid.
"The directors of the company are confident that this additional flexibility will allow the company to pursue its strategy to realise its full potential to operate as a true luxury company and remain focussed on ensuring the company builds the appropriate capital structure for the longer term," Aston Martin added.
Yew Tree Overseas has agreed to subscribe for 25% of the placing and Prestige Motor will buy 7.8%.
There will also be a retail offer via PrimaryBid, which will have the same issue price as the placing and is open to the public with a minimum subscription of GBP50 per investor. The retail offer was capped at EUR8 million.
Aston Martin shares were down 9.1% early Friday at 56.70 pence, the worst performer in the FTSE 250. At its current market capitalisation of about GBP860 million, the share offer could raise up to about GBP170 million.
Aston Martin completed a GBP536 million rights issue back in April. It received valid acceptances for 1.2 billion new shares under the 4-for-1 rights issue.
This followed January's announcement of a GBP500 million funding plan as part of its efforts to bolster its finances, which included an investment by Formula 1 team Racing Point owner Lawrence Stroll. The Canadian billionaire now is executive chair of Aston Martin. Last month, the company replaced Andy Palmer with Mercedes executive Tobias Moers as chief executive officer.
Separately Friday, Aston Martin said its retail sales in the second quarter were hit by the Covid-19 disruption. Wholesales are expected to be lower in the second quarter than in the first quarter and wholesale average selling price will continue to suffer from its de-stocking process.
Aston Martin said that as at May 31 it had GBP244 million of cash and its net debt was GBP883 million - including GBP109 million of lease liabilities from IFRS adoption the year before.
The firm is reviewing all of its future funding and financing options so as to increase liquidity, especially in light of Covid-19 uncertainty.
It has received approval for a GBP20 million loan under the Coronavirus Large Business Interruption Loan Scheme and plans to draw around USD68 million of its delayed draw senior secured notes due 2022 at a 12% coupon - having exceeded the vehicle order condition necessary to draw the notes.
Aston Martin is also in talks to obtain as much as GBP50 million of trade financing on top of existing inventory financing arrangements.
The company is conducting a "fundamental reset" which involves cutting down core sports car wholesales in order to rebalance supply to demand. To this end, the company reduced dealer stock by 617 units year-to-date as at May 31, with the goal of achieving "a new luxury norm" so as to produce a stronger order book and restore price positioning and exclusivity.
Plans have been set out for reducing the company's organisational structure so as to bring the cost base in line with smaller sports car production levels.
Aston Martin said Friday it has scaled up its St Athan manufacturing facility and full production of its first SUV, the DBX, has begun. The order book for the DBX has been maintained ahead of a July media launch, and annual wholesales are forecast to be evenly balances between DBX and sports cars.
Testing and development for the Aston Martin Valkyrie super car has resumed after Covid-19 forced closure of test facilities with deliveries on track to begin in 2021.
The Gaydon manufacturing facility is still closed and the company is "re-phasing marketing spend" so as to reduce operating costs year-on-year.
Capital expenditure and research & development in the first half is expected to amount to around GBP155 million, with most spend in the first half as intended.
Aston Martin said that although trading is still tough is many markets given the pandemic and trends are hard to predict, its businesses is beginning a return to normal operation with over 90% of its global dealer network open - 50% fully open and other rest at some limited capacity. This includes all 18 dealers in China, which have been open since mid-May.
Only ten dealers are not operational.
Aston Martin expects to post its interim results for the six months ended June 30 on July 29.
Moers will join as CEO on August 1 and to work alongside new Chief Financial Officer Ken Gregor, who joined Monday this week.
Executive Chair Stroll said: "We are making very good progress on my first priority, the rebalancing of supply and demand and reducing dealer stock as we reset the business and restore exclusivity. We have also successfully completed all test production trials for DBX and have scaled up St Athan for full production. I am delighted to confirm that production has now started and we are on track to deliver this beautiful, luxury, performance SUV in July as planned.
"We have taken decisive action to improve the cost efficiency of the company, in alignment with reduced sports car production levels, and are focussed on cost and investment control consistent with restoring profitability. Today we announce further steps to improve financial flexibility in a period of ongoing uncertainty with this additional funding to execute the business plan."
By Anna Farley; annafarley@alliancenews.com
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