Aston Martin has been in the news lately, partly due to some of the amazing machinery it outed but also because of its financial woes. In January, we reported that a consortium led by Canadian billionaire Lawrence Stroll, came to Aston’s rescue with a lifeline offer.
A rights issue has raised £536 million (AU$1.083 billion) with a further £150 million (AU$303 million) available to the company, according to a report by Autocar. This cash injection will help the financially stricken automaker to put their new DBX SUV into production. However, the global Covid-19 pandemic has forced the company to shutter its St. Athan factory in Wales. Customer cars are still slated for delivery later this year, pending the continuation of the supply chain.
Given the criticality of its financial position, the next 12 months are going to be make or break for the Gaydon-based maker. The fate of the company lies in the DBX’s sales performance. Just as the Cayenne revived Porsche’s fortune at the start of the millennium, such is the expectation Aston has for its maiden SUV.
The company says its order book “remains significant,” including over 2,000 commitments for the DBX. The company is banking hard on the AU$357,000 DBX selling in higher volumes than the stylish sports cars made famous in the James Bond movies and sway potential customers away from the Range Rover Sport SVR, Bentley Bentayga and Lamborghini Urus.
Given the cash injection and the green light for the DBX, Aston Martin then warned in statement saying: "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."
That’s is quite the warning. However, given the shadow of uncertainty cast by the global epidemic, Aston’s future could be at real risk. As it stands, Aston’s share prices haven’t been performing as expected. In late January, with Stroll’s investment, share prices were as high as £4.98 (AU$10.07).
Sadly, it’s gone downhill ever since the market started reacting to the coronavirus epidemic, with share prices dipping as low as £1.20 (AU$2.43). Share prices have ricocheted under the £2 (AU$4.04) mark since and has since been rising gently but marginally. This essentially means that the value of Stroll’s holdings has been halved. Bummer.
As a result of the cash shortage, most of Aston’s ambitious plans such as the battery-electric Rapide E, have either been canned or pushed back. With the Canadian as chairperson, the Valkyrie hypercar program was confirmed for this year, while the Rapide E was canned and the Lagonda project pushed back to 2025.
The gloomy financial situation, not just at Aston Martin but also globally, casts a shadow on Stroll’s Formula One plans as well, we imagine. Not many details abound on the company’s plans to enter Formula One, but it is expected to be a rebranding exercise. Stroll’s Racing Point team will become a works team bearing the Aston Martin name. Further, Aston's title sponsorship of Red Bull Racing ends this year, although the two remain committed in bringing the Valkyrie to production.
As for Aston Martin’s current financial predicament, only time will tell, we reckon. More than just Aston Martin is struggling amidst this climate of uncertainty. Watch this space as we bring you more updates.