Aston Martin in talks with Saudi Arabia over emergency fundraising

Carmaker’s debt problems mean that even a £200m injection of funds would be little more than a financial sticking plaster

‘Order books are robust and have strengthened in recent months, with sports cars sold out into 2023’

SAUDI ARABIA is poised to take a stake in struggling Aston Martin as the debt-ladened luxury car marque scrambles to raise money to secure its future.

Shares in the century-old sports carmaker briefly fell to their lowest price ever yesterday amid fears investors could see their stakes reduced.

Aston Martin said it “regularly keeps its funding options under review”, adding: “Any funding option, if explored and executed, would be to support and accelerate future growth.”

Industry magazine Autocar reported Aston was seeking £200m in funding. Saudi Arabia’s Public Investment Fund is in talks to inject cash in exchange for an equity stake, the FT reported.

Saudi Aramco, the state oil company, is a sponsor of Aston Martin’s F1 team. A spokesman said: “Aston Martin does not comment on rumour or speculation.” Funding talks come as the carmaker struggles with debts of just under £1bn, up by 32pc from a year ago. In May the company warned investors to expect an interest bill of £130m this year.

Aston Martin lost £112m in the first quarter of 2022, more than twice as high as a year ago.

Shares fell by as much as 19pc yesterday before closing down 8pc, at 442p, after the company reassured investors it was still on track to meet targets for the year. “Order books are robust and have strengthened further in recent months, with sports cars sold out into 2023 and order intake for DBX more than 40pc higher than the previous year,” the company said in a statement. Founded in 1913, Aston Martin has gone under seven times in its history. The company, known for making James Bond’s cars, is being squeezed by cheaper luxury providers of family cars, such as Porsche, and sportier marques such as Ferrari.

It is also paying the price for a slowerthan-expected delivery schedule of its Valkyrie hypercars, with just 10 delivered last year.

Valkyries are tuned to a near-f1 standard, requiring a 25-strong support team to keep them running once they are sold. Only 300 will be made.

Deliveries have been held back to maintain quality, billionaire executive chairman Lawrence Stroll said in February, but this means the rollout will take longer than initially hoped. Aston said yesterday that “production continues to pick up pace”.

T‘It’s not really glamour that Aston Martin is lacking ... it’s a financial whizz’

hings haven’t been going well for Aston Martin on the Formula One track this season. The team is languishing in the standings, there are rumours that number one driver Sebastian Vettel is ready to retire, and the four-time world champion has admitted that the car he has been driving isn’t up to scratch.

There have even been calls for billionaire owner Lawrence Stroll to sack his son Lance, employed alongside Vettel, after a string of lacklustre performances.

Yet, away from the paddock, it is the financial woes of parent company Aston Martin Lagonda that are of the greatest concern despite the best efforts of Stroll and his wealthy friends to rescue a company that has been bankrupt an incredible seven times previously.

News that Aston Martin is racing to secure yet another fundraising to shore up its severely stretched balance sheet has understandably caused panic in the City.

A report in Autocar magazine that the luxury carmaker needs as much as another £200m to “safeguard its future” was enough to wipe as much as 14pc off a share price that had already lost more than two thirds of its value since the start of the year. Despite a partial recovery to end the day 8pc down, the shares stand at record lows of 442p.

That the money is reportedly coming from Saudi Arabia’s Public Investment Fund, an arm of the Gulf state’s autocratic government suggests Aston Martin’s options are limited. Similarly, investors are entitled to ask what has changed given Stroll’s insistence as recently as February that no additional money was needed. That was “crystal clear”, he said.

It is now two years since the Canadian leapt aboard with a promise to rescue an outfit that had spent the entirety of its previous 15 months as a listed company looking like it was auditioning for a slot on the Wacky Races starting grid.

The fashion mogul oversaw a £500m refuelling that was supposed to do two things: provide some much-needed financial stability; and ramp up production.

But it hasn’t quite turned out that way. Operationally, the business is undoubtedly in better shape. Most importantly, an inventory car-crash that resulted in forecourts being flooded with models that then had to be offloaded at knock-down prices was swiftly ended. As Stroll rightly pointed out, it wasn’t a good look for a carmaker targeted firmly at the luxury end of the market. Orders of Aston’s new DBX gas-guzzling 4X4 got off to a strong start too – sales were up 60pc in the first three months of the financial year even if it was late to the SUV game, having been well and truly pipped by the likes of Lamborghini, Porsche and Bentley.

But factory bottlenecks have held back progress, causing delays of its long-awaited Valkyrie hypercar. Stroll’s attempts to shrug off the setback as “timing only” misses the point – aren’t customers entitled to expect a car for which they’ve forked out an eye-watering £2.5m to arrive on time, even if they are hand-made? In the end, it managed to deliver just 10 last year of 300 that are slated for production.

Meanwhile, repeated management shake-ups hardly give the impression of a harmonious organisation. The company is on its third chief executive in as many years after Tobias Moers, a high-profile appointee from Mercedes, was strapped to the infamous Aston Martin ejector seat after reportedly ruffling too many feathers.

Stroll is hopeful that successor Amedeo Felisa can inject some of the pizazz he surely picked up during an eight-year stint as boss of Ferrari between 2008 and 2016. But at 76-years-old there are doubts about whether he is the right person to spearhead the eventual push into electrification, a race that Aston Martin already lags behind in.

Besides, it’s not really glamour or style that Aston Martin is lacking. The beauty of its cars or the purr of its high-performance engines has never been in doubt. What is desperately needed is a financial whizz that can somehow work out how the company can lighten the boot-load of debt that is being dragged along behind it.

The giant £1.3bn refinancing of 2020 was clearly needed. It has helped to fund the turnaround, but more importantly provided vital breathing space on a colossal debt pile. Yet, the large bulk of it – £1.2bn in total – consisted largely of new borrowings replacing old, and came with such punishing costs that losses keep widening and cash resources are firmly in the red. The financing bill between August and October last year alone was £133m.

It’s a complex financial puzzle in which finance chief Ken Gregor is constantly moving the pieces, and it is unlikely to be solved by a £200m fundraising. On current numbers, that only just pays this year’s £195m debt interest bill, which is £25m more than had originally been pencilled in by the accounting department. It is the equivalent of little more than a financial sticking plaster.

And that’s just a taster of what is coming down the track: £1.1bn of high-interest bonds that require repayment in 2025 and 2026. How an outfit that has racked up nearly £800m of losses in little more than two years and is haemorrhaging cash is supposed to honour that commitment is a mystery that even James Bond might struggle to solve.

Stroll may be a serious petrolhead, he has deep pockets, and is clearly well-connected but even that may not be enough to prevent Aston Martin from eventually running out of road again.