Shares in Aston Martin Lagonda (AML.L) plunged in afternoon trade on Monday after it confirmed it is selling shares at a steep discount in an upcoming capital raise.
The FTSE 250 (^FTMC) British car firm announced a heavily discounted £576m ($663m) rights issue to help the lossmaking carmaker pay down debt. Shares fell over 14.3% to £411.7 per share in London.
The group will issue 559 million new shares at 103p per new share. That represents a 79% discount to the end of last week.
Aston Martin plans to use a large chunk of the proceeds to pay down debt, which stood at £957m at the end of March.
The move is also part of a plan announced by the luxury carmaker in July to raise £654m of equity, which it said would drive its “growth ambitions and supporting positive free cash flow generation”.
Around 45% of the four-for-one rights issue is backed by Saudi Arabia’s Public Investment Fund (PIF) sovereign wealth fund.
The PIF is a major shareholder in Aston Martin along with Mercedes-Benz (MBG.DE) and owner Lawrence Stroll’s Yew Tree consortium.
It comes as the group announced in July that it would tap the Saudi sovereign wealth fund, controlled by crown prince Mohammed Bin Salman.
Under the deal, the Kingdom’s PIF took a 16.7% share via a £78m equity placing, making it the second largest shareholder with two board seats.
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Russ Mould, investment director at AJ Bell, said: “For what’s meant to be a premium brand, Aston Martin is behaving like a desperate start-up company, going cap in hand once again to shareholders asking for more money. Its offering of shares at a 78.5% discount to last Friday’s closing price shows how desperate it is to secure new funds.
“While it says the new money should help it achieve strategic goals, this might simply be Aston Martin finding another piece of frayed rope to keep it afloat and avoid sinking completely into quicksand. The key question is for how long the rope will stay intact before the company needs help again.
“The car manufacturer has been a flop since joining the stock market and one has to wonder if it would be better off as a privately-owned company.”
Ousted Pakistani premier Imran Khan broadened his fight with the government in an overnight speech accusing officials of delaying snap elections to control who serves as the next army chief. The claim drew condemnation from the government and the military on Monday. Khan made his remarks Sunday at a rally of his Tehreek-e-Insaf party in Faisalabad, a city in the Punjab province.
Tesco chairman John Allan told Times Radio that the supermarket chain would be upping security measures 'selectively' as people turn to shoplifting amid the cost of living crisis.
Aston Martin said the new funding will be used to pay down its debts and to improve the firm’s liquidity.
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Aston Martin is selling shares at a 78pc discount as part of a Saudi-backed fundraising to patch up its balance sheet and repair the business.
British foreign minister Liz Truss was elected leader of the governing Conservative Party and the country's new prime minister on Monday. Truss must tackle industrial disputes, surging inflation and foreign policy challenges that include implementing Brexit and the war in Ukraine. Truss said last month that she favoured tax cuts over "handouts" to help people with the cost-of-living crisis.
(Reuters) -UK's FTSE 100 index ended slightly higher on Monday as commodity stocks gained, while investors looked ahead to the appointment of Liz Truss as Britain's new prime minister against a deteriorating economic backdrop. The commodity-heavy FTSE 100 ended 0.1% higher, after falling as much as 1.2% earlier in the day, while the domestically oriented FTSE 250 shed 1.2%. After weeks of an often bad-tempered and divisive leadership contest, Truss, who is UK's foreign minister, beat former finance minister Rishi Sunak in a vote of Conservative Party members.
Rights issue priced at a discount of almost 80% to Fridays closing price
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STORY: Aston Martin is raising around $660 million in a rights issue.It comes as major investors including Saudi Arabia's sovereign wealth fund keep faith with the struggling carmaker.Aston Martin said Monday (September 5) it would issue four new shares at 103 pence apiece for every existing share.The rights issue is part of a previously announced equity raising worth about $752 million. It makes Saudi Arabia's Public Investment Fund – or PIF – one of the luxury carmaker's largest shareholders.The British company said the rights issue was fully committed and underwritten with support from the fund.It also has backing from chairman Lawrence Stroll's Yew Tree and Mercedes Benz.Aston Martin said the fundraising will allow the company to lower its debt and invest in new models.The British carmaker – the favourite of fictional spy James Bond – has burned through cash and been hit by supply chain issues.Last month it rejected a near $1.5 billion investment proposal that would have handed control of the business to Italy's Investindustrial and China's Geely.Monday's update did not lead to shareholder excitement, however, as the stock price was down over 12% in early trade.
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