Aston Martin has asked a billionaire investor for another £20m in emergency money after the coronavirus outbreak triggered a sales slump, piling further pressure on the struggling carmaker’s finances.
Lawrence Stroll, who led a rescue deal in January, agreed to inject the sum in short-term funding, on top of £55.5m previously announced, as Aston Martin battles stock market turmoil while trying to stave off a cash crunch.
The World Health Organization is recommending that people take simple precautions to reduce exposure to and transmission of the coronavirus, for which there is no specific cure or vaccine.
The UN agency advises people to:
- Frequently wash their hands with an alcohol-based hand rub or warm water and soap
- Cover their mouth and nose with a flexed elbow or tissue when sneezing or coughing
- Avoid close contact with anyone who has a fever or cough
- Seek early medical help if they have a fever, cough and difficulty breathing, and share their travel history with healthcare providers
- Advice about face masks varies. Wearing them while out and about may offer some protection against both spreading and catching the virus via coughs and sneezes, but it is not a cast-iron guarantee of protection
Many countries are now enforcing or recommending curfews or lockdowns. Check with your local authorities for up-to-date information about the situation in your area.
In the UK, NHS advice is that anyone with symptoms should stay at home for at least 7 days.
If you live with other people, they should stay at home for at least 14 days, to avoid spreading the infection outside the home.
The rescue deal was agreed in January, saving the British company – best known as the makers of James Bond’s cars – from imminent collapse. A large debt pile had threatened to cause it to go bust for the eighth time in its 107-year history.
However, the coronavirus outbreak has caused Aston Martin’s share price to fall to £2.06 per share, far below the £4 price previously planned for the emergency share issue. Sales have plunged in China and the wider Asian market, and could fall elsewhere, the company said.
Under the new deal, Stroll and his consortium partners will receive 25% of the company in return for £171m – at a price of £2.25 per share – alongside the short-term capital injection. The consortium had previously agreed to pay £182m for 16.7% of the company.
In total the carmaker will receive £536m from the consortium and other investors, up from the £500m announced in January.
Aston Martin has lost more than 60% of its market value since the start of 2020, and is now worth only a tenth of its value when it floated on the stock market in October 2018, at a price of £19 per share.
The coronavirus outbreak has disrupted Aston Martin’s marketing efforts at a time when sales were already waning. The cancellation of the Geneva motor show forced it to launch new models via a YouTube video, while the postponement of the new James Bond film has also denied it a sales boost.
The chief executive, Andy Palmer, said the company had not yet experienced production disruptions despite some parts shortages – including for its make-or-break new SUV, the DBX.
However, analysts fear an extended downturn in sales in the UK, Europe and the US could add further cash pressures on the company, which is heavily invested in the new model launch.
Stroll said: “While the immediate outlook looks increasingly challenging, I remain fully committed to the future of the Aston Martin Lagonda and look forward to implementing our plans once the fundraising is complete.”
