Aston seals funds for DBX production, but issues long-term warning

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Mark Tisshaw

by Mark Tisshaw30 March 2020

Aston Martin claims it now has the funding to last at least the next 12 months as part of a new investment into the company that will also see it enter a works Formula 1 team in 2021

In a series of announcements this evening (30 March), Aston Martin has now formally confirmed F1 team Racing Point owner Lawrence Stroll will take over as executive chairman on 20 April. A rights issue has raised £536 million and a further £150m will be made available to the company.

That investment will allow Aston to put the DBX SUV into production imminently after the new St Athan facility returns to operation after its COVID-19-enforced shutdown last week, subject to any delays in the production chain. The first customer deliveries are planned this summer should the supply chain function as anticipated.

The next 12 months is considered significant for Aston Martin as the DBX SUV is seen as make or break for the company’s future. Make a success of it, and it will become the firm’s biggest selling model with the likely largest profit margins. Failure would put the very future of the company at risk given the huge investment needed to realise not just the car, but the St Athan factory in which to build it.

But while confirming the deal, Aston Martin Lagonda Ltd warned in a statement: “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 following the publication of the Original Prospectus.”

Since the prospectus including details of Stroll’s investment was published the COVID-19 outbreak has heavily impacted Aston Martin, and the firm said the resulting uncertainty raises questions over its future financial position – and making the success of the DBX even more critical.ADVERTISEMENT

The investment from Stroll’s so-called Yew Tree consortium stands at a total of £262 million, £171m of which has come today as part of the rights issue. The balance has come from existing company shareholders.

Aston’s share price has been in freefall ever since its stock market launch at £19 per share towards the end of 2018. It fell another 18% today to finish at £2.26 per share, before this deal was announced. It has tonight said that it would not have the funds to meet the 12 months of investment needed in its previous financial plan announced on 13 March due to the dramatic impact COVID-19 is having on its business.

Stroll, who replaces outgoing chair Penny Hughes, gave little detail on the plans to enter F1 as a works team, but it’s expected to be a renaming of his existing Racing Point squad. Aston’s title sponsorship of Red Bull Racing ends this year, although the two remain committed to bringing the co-developed Valkyrie hypercar into production this year.

“I, and my co-investors in the consortium, continue to believe passionately in the future of Aston Martin Lagonda,” said Stroll. “This is most clearly demonstrated by our investment of £262m which underpins the financial security of the company. This is a very significant capital raise of £536m – due to be made by my consortium and other shareholders at a very challenging time.

“This gives the necessary stability to reset the business for its long-term future. We have a clear plan to make this happen, including Aston Martin entering an F1 works team next season and I look forward to working with the management team to deliver this programme.”

Aston CEO Andy Palmer said there were 2000-plus orders for the DBX, as well as strong early demand for the recently announced Vantage Roadster. Beyond those, development would continue on the new V6 hybrid drivetrain as well as the Valhalla and Vanquish mid-engined supercars that Aston is prioritising development of ahead of the Lagonda sub-brand of electric cars that had been due to join the DBX at St Athan.

Aston’s two production sites at Gaydon and St Athan are currently on shutdown due to the COVID-19 outbreak, and many of its staff are being furloughed where appropriate. It has said it will look at all government help and support on offer in order to protect the company’s future.

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