RE: Breadowns19 Aug 2022 12:57
So having said that, we did not require cash to see our business plan through. What we did require cash for was threefold. One, to give comfort to the investment world that the company was never going to run out of money. And this extra money that we're putting on the balance sheet of approximately half of the capital raise will go into the company, will always give the company a cushion and be in a position that will always have between £400 million and £500 million on the balance sheet, point one.
The second thing it does, which was also an overhang on the share price was the debt level. Clearly, we inherited this debt from the previous shareholders. And I think we've done a pretty good job in trying to deal with it in the two-and-a-half years and realise it's time to raise equity to repay, hopefully, more of the expensive than less expensive debt, but regardless of whatever piece it is, significantly reduce interest rates by £30 million, £40 million a year. So it gave the money that the company required and it gives – takes away the overhang and hopefully gives the confidence in the investment community, analyst community should have of what I said on the cushion that it puts on the balance sheet.
As far as the other offer, the Board and its bankers studied it and unanimously completely rejected it. It was a camouflaged backdoor offer disguised as a rights issue. It was really a disguised takeover offer, heavily diluting all shareholders massively for no reason and no need, in order to buy the company very cheaply rather than coming in the front door and making a proper takeover offer, which, of course, would require a premium to the share price.
So the banks actually laughed. They thought it was quite astonishing. One said, I'd never seen anything like this my whole banking life. So the Board and the banks unanimously rejected it on the grounds of what I just described.
And I want to answer your third question. Comparing to the other, whether it's Ferrari or the other British brands, let's be very clear. We've been at this for two-and-a-half years. The others have been at it for five, 10, 15, 20. We've been at this for two-and-a-half years. I took over a company that was a wholesale manufacture-driven company, that made cars without orders or less than 10% had orders. We transformed this business and in two-and-a- half years from the day I took over, I said we will not make a car without an order. And since I took over two-and-a-half years ago, we haven't. That's why you see the retails outpacing the wholesales.
In addition, we've gone to almost 60% of our order book is what's called retail tagged. 65% of our customers go in and spec their car. That was less than 10% when we took over. That's an incredible statistic.
And thirdly, most importantly, in duration, I think you must know a lot about the automotive business, this business moves, it's like watching paint dry. To bring a new model to life, takes two, in most cases, three years.
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