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Aston Martin shares fall to record low after fundraising push falls flat

aston martin
aston martin

Aston Martin shares fell to a historic low after its fundraising push fell flat when not all investors bought discounted stocks offered to them.

The shares tumbled as low as 129.25 pence per share, which took the losses borne by early investors in the car maker to more than 90pc. The decline took the company to a valuation of £903m before the shares recovered some ground.

Shareholders bought 94pc of shares offered to them with the remaining 32m, worth about £41m, being sold on the market.

The fall comes after the company unveiled its plan earlier this month to raise £576m by selling shares at a deep discount to investors of 103 pence each, 78pc below the price at which they were changing hands before the announcement.

The company will use the money raised to pay off some of its more expensive borrowings.

The rights issue is part of an effort announced in July to raise £653m, which includes a first time investment from Saudi Arabia’s Public Investment Fund.

Mercedes-Benz is also backing the car maker in the fundraising, as is the company's largest shareholder and chairman Lawrence Stroll.

The company raised $150m in 2019, paying 12pc at a time when borrowing rates were at historic lows. Standard & Poor’s slashed the car maker’s rating to junk status shortly after.

Funds will also be put towards new production lines for new battery-powered cars. Aston Martin said paying down the debt and investing in electric vehicle capacity should help it generate free cash by 2024.

However, some analysts are concerned about its ability to meet this target.

“Our fundamental view of the company remains unchanged whereby we remain concerned over its ability to sustainably generate” free cash flow, analysts at Redburn said in a note.

The company made a pre-tax loss of £285m in the first six months of this year.

Aston Martin was rescued by investors in 2020, an effort led by billionaire Canadian investor Mr Stroll. He took over as executive chairman and since then has parted ways with two chief executives.

Tobias Moers was replaced by Amedeo Felisa in May. Mr Felisa was chief executive of Ferrari from 2008 to 2016.