Aston Martin Lagonda Global Holdings PLC's (LSE:AML) latest fundraising means the luxury sports car maker has raised almost £2bn in two years.
Even for its very well-heeled clientele (and shareholders), that is some fairly serious ackers especially as the progress since the famous marque embarked on its rejuvenation is discouragingly hard to discern.
The troubled British company is raising £575.8mln in a four-for-one fully committed and underwritten rights issue, which is part of a £653.8mln capital raise (read more).
The Public Investment Fund (PIF), The Yew Tree Consortium and Mercedes-Benz AG have committed to take up their full entitlements, amounting to 44.7% of the total issue.
An issue price of 103p per new share represents a 78.5% discount from the closing price on 2 September, highlighting the growing pressures in what is an increasingly tough environment.
Net proceeds from the capital raise will help Aston Martin repay existing debt and give its some financial headroom through lower interest payments.
After the rights issue, Saudi’s PIF owns 16.7% of Aston Martin, Lance Stroll’s Yew Tree Consortium 18.3% and Mercedes-Benz just under 10%.
David Bailey, Birmingham Business School, said: “The latest effort by Aston Martin to raise cash buys some time but doesn’t change the fundamental challenges facing the firm.
“It is difficult to see how it can survive as an independent player in a rapidly evolving industry with high costs of developing new EVs (electric vehicles).”
In October 2020, Aston Martin raised roughly £1.3bn via bond and stock offerings, with most of it used to refinance existing debt.
This handed Mercedes-AMG approximately 20% of the company.
Automotive analyst Charles Tennant said: “Half of this new money is going to be squandered on paying down debts, which currently sit at an eye-watering £1.27bn.”
This colossal injection of new funds would probably not be enough for Aston Martin to dodge its eighth bankruptcy, Tennant added at the time.
A year later, Stroll revealed the carmaker would raise approximately £200mln to build new headquarters for its Formula One (F1) team.
The carmaker and F1 team, however, are completely separate but do have several of the same shareholders.
Aston Martin’s turbulent times have been very much apparent in its recent results.
Its losses practically tripled in the first half of 2022 to £285mln from £91mln a year earlier.
Analysts think even this latest cash injection will not be enough to change the company’s fortunes, with a takeover most probably needed for survival in the long term.
First-half sales, meanwhile, fell to 2,676 from 2,901, with it expecting to sell over 6,660 vehicles in all of this year.
“Unless sales can be revved up soon, I’m afraid yet more cash - or even a take-over perhaps by the Chinese behemoth Geely - is going to be required sooner than later,” Tennant commented.
It seemed as if the recent bosses of Aston Martin were foreshadowing the company’s misfortunes, as it appointed its third chief executive in as many years in May, when former Mercedes man Tobias Moers stepped down following a two-year stint.