Aston Martin pays hefty price for £120m loan

ASTON Martin has been forced to pay a hefty interest rate to secure a £120m loan to shore up its balance sheet.

The troubled luxury car brand said the cash raised from selling bonds would help secure its finances as it prepares to launch its first SUV, the DBX (pictured).

But in order to sell the debt, which will come due in April 2022, it has agreed to pay investors an eye-watering interest rate of 12pc.

The firm also has an option to raise £80m more if certain conditions are met but this could come with an even higher interest rate of 15pc if it misses sales targets.

Analysts said the deal raised alarm bells about the delicate state of Aston’s finances, as it grapples with tough market conditions around the world.

Russ Mould, investment director at AJ Bell, said: ‘These interest rates are very high and are a major red flag that investors consider the car company to be a highrisk entity. It would suggest Aston really needs the money and has had to bow to investors’ demands.

‘History tells us that companies with high debt repayment obligations can get into real trouble in a market downturn if earnings are hit and they struggle to service the debt.’

Broker Jefferies told clients that analysts expected £200m to be raised with an interest rate of 10pc, describing the actual deal as ‘expensive’. It comes after a torrid year for the company, which has seen its shares plunge by 71pc. They listed on the stock market at 1900p each in October 2018. Shares fell 4.2pc, or 24p, at 550.8p yesterday.

It was the second time that Aston has raised money this year, after it took out a £20m loan in August. Analysts at Merrill Lynch wrote: ‘Two rounds of rescue finance within 12 months following an IPO may be unprecedented.’