Shares of Aston Martin fell nearly 16% after the British sports car maker revealed it would give a steep discount on a £576million rights issue as it tries to cut its large debt.
The luxury carmaker revealed on Monday that investors would be able to buy more shares at 103p per share, a steep 78% discount from Friday’s closing price of 480p. Its shares closed down 15.6% at 405p early Monday.
The rights issue was first revealed in July in a total fundraising of £650m, with Saudi Arabia’s Public Investment Fund (PIF) becoming the second largest shareholder by the through an equity investment.
Lawrence Stroll, the billionaire fashion mogul who spearheaded the 2020 bailout, has previously said he has no concerns about taking on investments from the PIF. The fund is headed by Saudi Crown Prince Mohammed bin Salman, who is accused by US intelligence of ordering the 2018 murder of journalist Jamal Khashoggi.
Aston Martin hopes the money will allow it to reduce debt repayments and invest in new electric models. The company has lagged behind some rivals in electric car work, relying instead on sales of gasoline-powered sports cars and newer sport utility vehicles.
The company’s shares have lost nearly four-fifths of their value in the past 12 months as it grapples with high debt payments and stubbornly low sales and supply chain issues. by companies around the world.
Shares of Aston Martin started trading at £19 when it floated on the London Stock Exchange in October 2018. However, since then it has had a torrid period under the stewardship of three different chief executives.
High listing costs meant it needed a bailout in early 2020. That bailout came just at the start of the coronavirus pandemic, forcing its factory to close and putting it through a painful period of reduced job numbers. cars owned by dealers.
The loan he took on during that bailout left him with “a heavy burden of debt and the associated interest costs”, which weighed on profitability, he said on Monday. .
He said there was a “challenging operating environment, impacted by the war in Ukraine, the Covid-19 lockdowns in China, as well as continued supply chain and logistics disruptions”.
Aston Martin said it had made operational improvements including reducing the cost of manufacturing a car by 20% and increasing the company’s brand visibility by naming it after a Formula 1 racing team.
The company ultimately aims to manufacture 10,000 cars per year and generate positive free cash flow by 2024.