(Alliance News) - Aston Martin Lagonda Global Holdings PLC on Friday said it plans to raise GBP653 million in equity, after rejecting a GBP1.3 billion investment offer, which will make Saudi Arabia's sovereign wealth fund its second-largest shareholder.
The Gaydon, England-based luxury carmaker proposed an equity raise of GBP653 million, led by Saudi Arabia's sovereign wealth fund, the Public Investment Fund. Also taking part are Lawrence Stroll's Yew Tree Consortium and fellow car maker Mercedes-Benz Group AG, and in total the three are expected to invest GBP335 million.
The investment would make Saudi Arabia's Public Investment Fund the company's second largest shareholder. Stroll, Aston Martin's executive chair, remains the car maker's largest shareholder.
Formed in 1971 to support the Saudi economy, Saudi Arabia's PIF - one of the world's largest sovereign wealth funds - has around USD620 billion in assets under management.
Aston Martin will raise the funds through a placing of 23.3 million shares at a price of GBP3.35 each for GBP78.0 million to PIF, followed by an underwritten rights issue to raise GBP575 million.
Aston Martin shares rose 19% to 440.90 pence each in London on Friday morning, giving the company a market capitalisation of GBP504.3 million - meaning the total proposed equity raise is worth more than its current market value.
Proceeds from the fundraise will go towards the repayment of existing debt, improvement of the company's cash flow generation and to provide a liquidity cushion for what remains a challenging operating environment, Aston Martin said.
"The board believes the proposed capital raise will serve to further support the company's re-affirmed medium-term targets of about 10,000 wholesales, about GBP2 billion revenue and about GBP500 million adjusted earnings before interest, tax, depreciation and amortisation by 2024/25, and strongly positions it for positive free cash flow generation from 2024," it explained.
At the end of June, industry publication Autocar reported that Aston Martin was seeking to raise funds, but due to GBP1.2 billion of outstanding loans and bank drafts, it would be unable to raise funds by taking on more debt. Autocar also reported that the fundraising could include bringing a significant new investor in, potentially offering a position on the company's board as an inducement.
On Friday, Aston Martin said PIF will be given two seats on the board, assuming it has a 10% stake in the company following the equity raise. Meanwhile, the Mercedes stake will slip to 9.7% from 11.7% currently, despite it taking up its full entitlement of shares.
Aston Martin also confirmed that it rejected an offer from Investindustrial Group Holdings and Geely International Hong Kong - collectively the Atlas Consortium - for an equity investment of up to GBP1.3 billion, comprising a GBP203 million firm placing and subsequent GBP1.11 billion underwritten rights issue.
"The board of Aston Martin believes that the proposal markedly overestimated the company's new equity capital requirements, would have been heavily dilutive for existing shareholders, and comprised a number of execution obstacles," the company stated.
The capital raise will help the company's pipeline, as Aston Martin set out plans for a fully electrified grand tourer/Sport and SUV portfolio by 2030.
Meanwhile, the carmaker reaffirmed its outlook for 2022 as it continues trading in line with expectations, seeing "strong demand trends continuing". It delivered 27 Valkyries in the half-year.
The company will release its interim results on July 29.
By Tom Budszus; tombudszus@alliancenews.com
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Aston Martin Lagonda (AML)
