(Alliance News) - Aston Martin Lagonda Holdings on Friday said Canadian billionaire Lawrence Stroll will invest in the troubled luxury carmaker in a bid to reverse its fortunes following a dire 2019.
Aston Martin shares leapt 22% at open Friday on the news.
Aston Martin announced a strategic equity investment of GBP182 million by a consortium led by Stroll and proposed rights issue supported by the major shareholders of GBP318 million to raise combined proceeds of GBP500 million.
Aston Martin is placing of 45.6 million new ordinary shares at a price of 400 pence per share to raise the GBP182 million.
The financial rescue package hands the company a lifeline following a string of profit warnings last year.
Aston Martin Lagonda said it is to conduct an operational and financial review to strengthen its balance sheet to "necessarily and immediately" improve liquidity and reduce leverage.
Stroll is father of Formula 1 race car driver Lance Stroll and owner of F1 team Racing Point. In December, Autocar magazine reported that billionaire Stroll was preparing a bid to buy a major stake in the British luxury carmaker.
The Racing Point Formula 1 racing team will become the Aston Martin Formula 1 racing team with effect from the 2021 season, the company added.
Further, Yew Tree Overseas - a vehicle controlled by Stroll - has agreed to provide GBP55.5 million of short-term working capital support.
Aston Martin said Stroll is to join the board and become executive chair upon completion of the placing and will replace Penny Hughes.
"Today's fundraising is necessary and provides a platform to support the long-term future of the company. 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," said Aston Chief Executive Officer Andy Palmer.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.1% at 7,372.69
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Hang Seng: down 0.4% at 26,350.00
Nikkei 225: closed up 1.0% at 23,205.18
DJIA: closed up 124.99 points, 0.4%, at 28,859.44
S&P 500: closed up 0.3% at 3,283.66
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GBP: firm at USD1.3121 (USD1.3102)
EUR: flat at USD1.1024 (USD1.1028)
Gold: down at USD1,574.64 per ounce (USD1,582.85)
Oil (Brent): firm at USD58.95 a barrel (USD58.60)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
UK Brexit day
0930 GMT UK monetary & financial statistics
1100 CET EU preliminary flash estimate GDP
1100 CET EU flash estimate euro area inflation
0830 EST US personal income & outlays
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Boris Johnson will hail the "dawn of a new era" as the UK leaves the EU. At 11pm on Friday, bonds dating back to 1973 when the UK joined the European Economic Community will be broken, but the prime minister insists Brexit marks "not an end but a beginning". Very little will change at the moment of Brexit as a result of the deal which Johnson agreed with Brussels and the 27 remaining member states. But the UK faces further uncertainty as both sides seek to strike a trade deal by the end of the year. In a symbolic move, Johnson will chair a meeting of his Cabinet in Sunderland, the city which was the first to back Brexit when results were announced after the 2016 referendum.
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UK consumers enjoyed a small "Boris-bounce" following the Conservatives' general election victory last month, according to a long-running survey. GfK's Consumer Confidence Index rose two points to minus nine in January, but it means the data has remained in negative territory for the past four years. The two-point rise was also slower than the three-point rise between November and December, GfK added.
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Irish political parties have defended their spending plans just over a week before voters go to the polls. Taoiseach Leo Varadkar rejected a claim that it has been a "dishonest general election" in reference to manifesto promises made by parties. He said the projections all the parties have used are based on assumptions made by the Department of Finance. Fianna Fail leader Micheal Martin also defended his time in government, saying he had learned lessons. Seven political party leaders took part in the live debate on Virgin Media on Thursday evening. The Fine Gael and Fianna Fail leaders faced off against Sinn Fein president Mary-Lou McDonald, Labour leader Brendan Howlin, Solidarity-People Before Profit's Mick Barry, Green Party leader Eamon Ryan and the Social Democrats' Catherine Murphy.
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The US told its citizens not to travel to China in the first major response to the World Health Organization's declaration of a global emergency over the spreading coronavirus, as Chinese authorities increased the toll to 213 dead and nearly 10,000 infections. The State Department raised it warning alert to the highest level, telling its citizens "do not travel" to China because of an epidemic that has now spread to more than 20 nations. Hours earlier, the WHO, which has faced criticism for initially downplaying the virus threat, revised its risk assessment after crisis talks in Geneva.
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China's manufacturing activity slipped in January, official data showed Friday, as the country grapples with the coronavirus outbreak. Official figures released Friday showed that the Purchasing Managers' Index for manufacturing, an early gauge of factory activity, came in at 50.0, down slightly from 50.2 in the month before. A reading above 50 indicates the sector is expanding while below 50 shows a contraction.
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The US Senate entered the second of two days of questioning in the impeachment trial of President Donald Trump on Thursday, with a pivotal vote looming on whether to allow witnesses. Democrats need four Republican senators to buck their party line in order to have a majority on Friday to call for witnesses at the trial. They want to call Trump's former national security advisor John Bolton and other top White House officials, whom they say will cement the case against Trump. Nancy Pelosi, leader of the Democrats in the lower chamber House of Representatives, said she would not recognize an aquittal if the trial does not include witnesses. But some Republicans have indicated that they will seek to block witnesses and are ready to acquit Trump in a vote that could come as early as Friday.
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BROKER RATING CHANGES
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HSBC CUTS BT GROUP TO 'HOLD' (BUY) - PRICE TARGET 185 (225) PENCE
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DZ BANK CUTS SHELL TO 'HOLD' (BUY)
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COMPANIES - FTSE 100
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Wealth manager Hargreaves Lansdown said the first half of its financial year was another period of growth despite facing market challenges, which included the demise of the Neil Woodford-led investment funds that Hargreaves had championed. For the six months to December 31, revenue was up 9% to GBP257.9 million from GBP236.4 million last year and pretax profit rose 12% to GBP171.1 million from GBP153.4 million. In addition, Hargreaves Lansdown reported a 22% increase in assets under administration to GBP105.2 billion from GBP85.9 billion the year before. The company raised its interim dividend 9% to 11.2 pence from 10.3p.
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COMPANIES - FTSE 250
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Soft-drinks maker Britvic said it made a robust start to the financial year and is confident of achieving full year expectations. For the first quarter to December 31, Britvic posted revenue of GBP369.8 million, up 4.9% from the first quarter last year. Britvic added that it remains in discussions with Refresco over the potential sale of assets in France and was confident that the transaction will complete later in 2020. "I am pleased to report that we have delivered a robust start to the year. While we anticipate conditions will remain challenging, we are confident of achieving market expectations for the year, underpinned by the strength of our brand portfolio and exciting marketing and innovation plans," said CEO Simon Litherland.
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Investec said its soon-to-be spun-off asset management business, Ninety One, intends to seek a listing in both London and Johannesburg. The asset management business will be rebranded when its demerger from its banking parent is concluded on March 13. The company said back in September 2018 that it was pursuing the demerger of Investec Asset Management following a strategic review. On Friday, Investec announced the unit's intention to undertake an initial public offering and the expected publication of a registration document. Ninety One is seeking a listing for its PLC shares on London's Main Market with a secondary inward listing in Johannesburg. The Ltd shares will have a primary listing in Johannesburg.
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COMPANIES - INTERNATIONAL
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Amazon.com released earnings figures for the holiday quarter that trounced market expectations. Profit in the final three months of 2019 rose 8% from a year ago to USD3.3 billion as net sales grew 21% to USD87.4 billion, according to the Seattle-based firm. A record number of people signed up in the quarter for an Amazon Prime service that provides perks from one-day delivery to streaming television and music, according to Amazon Chief Executive Jeff Bezos.
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Visa reported double-digit earnings growth in the first quarter of its current financial year amid a surge in the number of transactions. The payments technology provider reported net income in the three months to the end of 2019 of USD3.3 billion or USD1.46 per share, up 10% and 12%, respectively, over the prior year. Net revenue in the first quarter was USD6.1 billion, Visa said, an increase of 10%, driven by continued growth in payments volume, cross-border volume and processed transactions. Payments volume for the three months ended December 31 grew 8% over the prior year.
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German auto giant Volkswagen wants to buy the part of American truck maker Navistar that it does not already own for USD2.9 billion. In 2016, VW bought a 17% stake in Navistar, giving it a foothold in the US market, and now its truck division Traton wants to buy the rest. "If the offer is accepted, Traton will become the sole owner of Navistar", Volkswagen said in a statement. Navistar said it will closely study what it called an unsolicited offer.
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Hitachi lowered its earnings guidance due to high one-off expenses booked in the first nine months of its current financial year. The Japanese industrial conglomerate said revenue in the nine months to the end of 2019 declined by 6% to JPY6.344 trillion year-on-year amid to weak performance of the Smart Life segment due to divestitures. More positively, Hitachi said revenue increased in the IT and Industry segments. Looking ahead, Hitachi cut its Ebit guidance for the year to the end of March. The company said it now expects its annual Ebit to be JPY485.0 billion compared to JPY505.0 billion expected previously.
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Friday's Shareholder Meetings
Shaftesbury
Britvic
Connect Group
Treatt
Hansteen Holdings (re Potter UK takeover)
Aura Energy (re approval of convertible note)
C4X Discovery
Quarto Group (re open offer)
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By Tom Waite; thomaslwaite@alliancenews.com
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