Aston Martin could require more cash despite bailout04/07/2020
According to a report by Automotive News, Aston Martin may need to seek additional funding despite receiving a cash injection of 536 million pounds from Lawrence Stroll’s Yew Tree Consortium as well as existing company shareholders.
The carmaker is lacking working capital based on European Securities and Markets Authority regulations, with the issue arising from the Covid-19 pandemic that has created “increased and unquantifiable uncertainty” in its business.
This situation has resulted in Aston Martin being unable to come up with a model for a “reasonable worse case downside,” and will require it to tap into high-interest notes so it can gain a strong footing.
“Taking into account the proceeds of the capital raise, the company is of the opinion that the group does not have sufficient working capital to meet its requirements for 12 months” from February, when it published the original prospectus for the Stroll bailout, the company said.
Ever since going public in 2018, Aston Martin has struggled with cash flow and dealer-inventory back-ups. It hoped that the most recent round of fundraising would be enough to put off seeking additional funds, but the health crisis has complicated the turnaround plan put in place with Stroll’s arrival, which will see DBX production resume and Aston Martin entering a Formula 1 works team next season.
Aston Martin’s directors said they were confident that the company has enough access to loans. That includes around 82 million pounds of delayed draw notes issued in October 2019 that carry an interest rate of at least 12%. With Yew Tree’s additional investment, the consortium will own a larger stake of the British carmaker, with Stroll set to take over as executive chairman next month.
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