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Based on my reading of the report I would suggest there are two key dates. Up to the 16th November. If the bond issue is fully subscribed early, they are likely to announce it. I would expect the sp to respond to this, but I couldn't say to what degree, but positive. The second key date will be early December when they lay the resolutions before the shareholders. I don't know what the resolutions will be asking for, so impossible for me to comment. Assuming that they are passed , this will mean that the going concern qualification will not apply and I would say that this is a point where institutional investors will get more comfortable. Hope that helps.
I have now had a chance to review the Q3 report. I note that they have not provided a balance sheet. The issue I raised earlier today regarding the 'Going Concern' status of the company is addressed on page 13 or the report. The directors have disclosed under IAS 1 that they recognise a fundamental uncertainty regarding the going concern which they feel will be resolved by the approval of various resolutions by the shareholders in early December. I note that some of the existing bonds are due for repayment in April 2022 which means that from April 2021 this debt would move into the current liability portion of the balance sheet. In my opinion this is more likely than not to keep the sp subdued. If the bond issue is fully subscribed and the resolutions are passed in line with the directors wishes and assumptions, then the short to medium financial position of the company will be healthier and the qualification to the accounts regarding the fundamental uncertainty of the going concern can be removed. Whilst these issues are vital and clearly Stroll & Co have been doing a lot of heavy lifting in the background, focus will inevitably shift to the product and to the moving of units.
Crank...it's the fact that the 16th is the closing date that concerns me as the interim report is due on the 12th. If they are fully subscribed on or before the 12th then the report will be out on time. If there is a delay the market might take a dim view.
Technical point on the bond issue. If there are any notes or significant debt repayments falling due within 12 months of the Balance Sheet date, then this debt repayment has to be shown in current liabilities. This could put the balance sheet in a position whereby current liabilities exceed current assets and thereby bring the 'going concern' basis into question. This would be a difficult argument with the auditors and perhaps why Stroll chose a moment for the bond issue that puzzled some bankers. let's hope the bond issue is a success, but don't be surprised if the report due on the 12th is delayed if the bond issue is under subscribed and or the threshold hasn't been reached.
Richard, there is another fundamental they need to address. I was at Gaydon for the launch of the Vanquish in 2013 and I was being told that they were going to rationalise the various offerings as the public were confused by so many cars. Betz made a big mistake which has not been corrected. The company created the Vantage derivative as the high performance option and of course the Volante was the convertible. Nice and simple. Betz called the V8 the vantage and thereby changed it from the high performance option to a product. For example the 2008 DBS should have been the DB9 Vantage. This would have made a lot of sense. The AMV8 could have had a vantage option. It would be simple for consumers to understand. This mistake was made once before in or around 1970 when they modified the original DBS 6 cylinder from twin headlamps to the new single headlamp style to get rid of the last 70 cars. They called it the AM Vantage, but that was the end of it. The Vantage and Volante badges have been used to good effect over the years and they should go back to the originally intended use.
Stroll only has allegiance to one share price and that is 50p. In terms of the bond issue, we are not privi to the terms of the note. My guess is that if the offering is eventually fully subscribed, Stroll will then make his next move. The current debt piece may have a lot of restrictions that he wants to ditch so the bond issue may not be all about the cash. In fact, until there is an announcement that the bond issue is either fully subscribed, or has reached the minimum threshold, I would remain cautious. The bond issue must raise sufficient cash to discharge the existing secured notes, including any early settlement penalties. The cancellation of the UK piece of the debt will have a structural reason behind it and it is more likely than not to ne a negative.
Synxs - Thank you for your comments. my opinion is based on the money I have invested. I am a passionate Aston Martin guy. Aston have been a big part of my life, as has James Bond. I am not going to explain why as this will give my identity away. I bought my first Aston when I was about 23 and I have owned so many that I couldn't even count them...I am talking about a serious number. I have had a close involvement with the company over many years and I would love to see the company fly. I have owned a lot of cars, and still do, but is very disappointing to me that there is not an Aston in the current line up that I would buy. I would probably buy the OHMSS Edition DBS and have Works Service make a few changes, but the price of the car is just nonsense. The two Aston's I own at the moment have their flaws, but overall I am very happy with them. As soon as Aston offer a car that is truly gorgeous to my eyes I will be amongst the first to place my deposit for a new one. I felt very odd driving a Bentley for a long time when my personality and history screamed Aston Martin.
It's interesting that you highlight the Reichman issues, which I raised on this BB last week. People were generally unhappy with my comments, but I posted with the best of intentions. As an ex CEO, CFO and MD of a luxury brand manufacturing company I believe I have an insight into the issue. There is a tension between aesthetics and the engineering solution to aerodynamics, cooling and packaging. I watched the documentary on the DBS with Reichman and it suggested to me that he lacked imagination and so the car became engineering solution led. For example, the back end of the DB11 and particularly the front splitter lack aesthetic innovation. The front splitter looks like a plank. The same is true on the DBS. The profile of the car is fine, the back end above the number plate is poor and the front grill is just nonsense. The Bond Edition of the DBS is a big improvement, save for the wheels. Since the late 1950's with the original Touring design for the DB4 Aston have used a similar style grill and have had a side strake. These elements along with a fly off hand brake and window lift switches either side of a clock in the centre of the dash were hard won styling ques that have been gradually abandoned. Car companies pay a fortune to develop unique defining features and Reichman has just binned them. I have the benefit of being close to the product and having been involved with the issue of aesthetics and engineering solutions, it is my opinion that in every case the aesthetics must win out. The chief designer not only has to have imagination, but also be a strong leader to force engineering to solve the problems in a different way. For sure there have to be compromises, buy Reichman designs just don't cut it. I thought a 5 year old could have put a better front end on the DB10 and it seems that the front of the car is his stumbling block at the moment. Unfortunately the DBX has the same problem....I am very disappointed. I have made my feelings know to Aston Martin and the sales were diplomatic but it was clear they are not happy. Aston also need to ditch the bad by drug dealer image of mat paint and black wheels. This is why I say Reichman must go.
Dunnie, I have been following your posts for some time and appreciate the effort and insight they provide. In terms of value for AML there are a few stress tests that can be applied to get orientation. The two formal methods of valuation for any business are ‘the going concern’ and breakup’. The share price as it is linked to enterprise value is usually a multiple of EBITDA give or take market sentiment. Valuing intangibles on the balance sheet is very difficult as this is often a manipulation of the rules framed by strategy. AML will want to retain the max value of intangibles to bolster the BS, but this would not necessarily be realisable under the breakup valuation. An earlier poster also referred to the brand value, but of course this is not on the BS at all. Looking at the numbers based on the current shares in issue an sp of over £0.54 is key as this will give a formal market cap of £1bn. This is a good number to build on for investors, both debt and equity. Based on the enterprise value represented by the BS an sp of over £0.91 is important as this will represent a share price that is on par with the enterprise value. This would ward off a hostile takeover as it would far exceed the breakup value. I would muse that the current share price is probably a fair reflection of the risk in the business and it is fair to say that as the liquidity horizon is pushed back, then the share price should improve. If todays bond issue is successful, I would expect a rise in the sp, but always have in mind that the market generally is in reverse at the moment so it might take a while for a step advance in the sp. No need to be despondent if there is not an immediate jump in the sp.
3300 - There was a time in my life that if I was cut into two halved the name Aston Martin would have been written on my insides. I have had a long history with the brand and I have been involved with the company directly. I would like to see the company succeed and move away from the financial uncertainty that has dogged the company throughout it's history. The only way a company can succeed is to be honest with it's self. I think Betz took the company down a wrong path and now the company has to carve put a new future and purpose. I think that by getting the designs and price points right, for both young entry level buyers as well as older die hard Aston customers, is vital. Stroll , I understand, is looking to mid engined cars and so the design and theme has to be right.
XLNC - I agree absolutely, that is what different models and price points are for with a common mindset within the design. I think the principle of the Vantage is right (Wrong name though). Again the designer ran out of ideal with the front and side of the front wing. The Bond edition addresses the front and it is much better.
Buying second-hand is vital to the success of the company. If the cars are sought after, this keeps the residuals up and the devaluation down. This results in a stronger demand for new cars and supports the price. A few months ago they were trying to sell me a DBS Volante saying the average price of a well optioned car was north of £300k, but in reality they were taking just over £200k. This in turn is reflected in the soft second hand prices which makes people think twice about buying them. In terms of the design aspect of the DBS, they had a second crack at it with the limited edition Bond OHMSS car and the front end was much improved. It is difficult to understand why they didn't focus their minds and sort the front of the car in the first place.
I have owned Aston's for about 40 years now. I currently own 2 , but in the past have owed a lot of them. I have spent many millions on new cars over the years and so when I say I think the designer should be sacked for the company to advance, then I am the sort of person who's money they are not getting. BTW, I also own a lot of AML shares so my opinion is just honest and clearly I am invested as I think Stroll will get it right.
The question is, do you think they are gorgeous, or do have you actually bought one. The first rule of any design is to have your potential customer front and centre of your mind. There is one car in the current line up that I think is the real deal.
The main problem with AML is that the cars are not that nice. The designer needs to be sacked. You can argue all you like about restructuring and what Stroll is up to, but at the end of the day it's about selling product. The Bentley GT changed the fortunes of Bentley because it was a great car at the right time. If Stroll and the team he is putting together can put out great cars that look fantastic, all will be well with the AMP sp.