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(Bloomberg Opinion) -- The maker of Aston Martin sports cars is considering raising cash from an expensive corner of the bond market. The hope must be that this is just one part of a more radical attempt to strengthen its finances — and not the last resort.Aston Martin Lagonda Global Holdings Plc is looking at issuing an unsecured junk bond that’s rated triple C (well below investment grade), Bloomberg News reported on Friday. That would add to the company’s already high leverage. Net debt was five times its trailing 12-month Ebitda on June 30, by Aston’s own assessment. That multiple jumps even higher using more conservative measures of its profit. Aston has more than 800 million pounds ($1 billion) of gross debt due in 2022. Most of that is junk bonds secured on its assets. Their rating is B minus and they yield close to a punchy 9% — although trading is illiquid so that’s not a precise guide to Aston’s current funding costs.What then might Aston have to pay for issuing new debt that would get wiped out before the existing bonds if things go awry for the company? A rational investor would demand a yield comfortably above 10%. This might create more cash flow problems for Aston than it solves.Such a bond sale could, however, make sense in certain scenarios. The holders of Aston’s existing debt need the group to become durably profitable and self-funding as soon as possible. So they might want to extend more funding on terms that would make new investors balk. Indeed, Aston said in July that if it needed money it would go to familiar sources.And the carmaker’s requirement for expensive funding might be short-lived. It may soon have hopes of generating decent cash flow on its own. Its cool DBX sports utility vehicle is due to glide off the production line in the second quarter of next year. Maybe sales will match its looks.Yet it’s questionable whether stop-gap funding is enough to pay for the current business plan. Surely something more will have to give. A straightforward issue of new equity – say, through a rights offer, placing or introduction of a new investor – would give Aston genuine flexibility, but the company has seemed opposed to such a move.That leaves quasi-equity, in the form of a bond that could convert into stock when the share price is higher, or accepting that the strategy as it stands simply isn't affordable and that capital spending has to fall. Either way, Aston’s reliance on the junk market can only go so far.To contact the authors of this story: Chris Hughes at email@example.comMarcus Ashworth at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Aston Martin Lagonda Global Holdings Plc may soon return to Europe’s bond market to offset pressure on the luxury carmaker’s free cash flow, according to four people familiar with the matter.The potential debt issuance will be unsecured and rated CCC, according to two of the people, who are not authorized to speak publicly and asked not to be identified. That would give existing bondholders a buffer given the company’s outstanding notes are all secured.“If we require some additional financing, from sources with which we are familiar, to maintain capacity and flexibility then that is exactly what we will go out and get,” a company spokeswoman said in emailed comments.The new financing is expected to bolster Aston Martin’s liquidity until it launches a new SUV model -- the DBX -- in April 2020. The U.K. carmaker generated about 900,000 pounds ($1.1 million) of cash from operations in the first half of the year, the lowest since it started to disclose earnings, data compiled by Bloomberg show.Another factor pressuring the company’s cash flow is the U.K. government’s refusal to grant export finance, some of the people familiar said. A lack of government-backed funding may have accelerated the timetable to launch new debt, they added.The Gaydon-based manufacturer has blamed its ailing sales on ongoing Brexit uncertainty and a wider fallout in the auto industry this year. Its equity has slumped 70% since the company went public at 19 pounds per share 11 months ago.Aston Martin avoided a public debt offering in April and instead opted to privately place $190 million of bonds in April. That issuance would allow the company “to weather the difficult industry conditions,” S&P Global Ratings said at the time.To contact the reporter on this story: Laura Benitez in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Vivianne Rodrigues at email@example.com, Charles DalyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Buying auto stocks in a downturn seems counterintuitive, but it works if it’s Ferrari. The stock is up big year to date and Goldman Sachs sees additional gains for the maker of iconic sports cars.
Shares in Aston Martin plunged 17% to a post-flotation low on Wednesday after the luxury British carmaker slumped to a half-year loss, the latest automotive firm to be hit by falling demand in Europe. Aston Martin, best known as James Bond's favorite marque, has been undergoing a turnaround plan since Chief Executive Andy Palmer took over in 2014, designed to renew and boost its model line-up and move into new segments. The group posted a pretax loss of 78.8 million pounds ($96 million) in the six months through June from a 20.8 million pound profit in the first half of 2018.
Four cars were made for the early James Bond movies -- and one of them will be up for auction next week. "CBS This Morning" co-host Anthony Mason got to fulfill a lifelong fantasy and take the Aston Martin for a spin before it hits the auction block, where it's estimated to net $4 to 6 million.
It's considered one of the most famous cars in the world; the James Bond's Aston Martin DB5, that is. And it's up for auction and could sell for $6 million dollars. Barney Ruprecht who is RM Sotheby's Senior Car Specialist, joins 'On the Move' to discuss more.