Debt-ridden British carmaker Aston Martin has drafted in the support of Mercedes and the Saudi Arabian sovereign wealth fund after confirming the details of a £576 million rights issue in a bid to shore up its finances.
Mercedes has committed to a £56 million investment as part of the deal, while the Saudi-run Public Investment Fund, controlled by crown prince Mohammed bin Salman, took up its full entitlement under the rights issue and is understood to be becoming the firm’s second largest shareholder.
The fund attracted controversy after taking over Newcastle United Football Club last year, with fans protesting over Saudi Arabia’s human rights record.
James Bond film favourite Aston Martin said it would use the capital raise to pay down its debts and invest in a new range of electric sports cars.
Speculation earlier this year that the heavily-indebted company was having trouble raising finance on credit markets led to speculation that it would use the sale of fresh equity to raise capital.
Its shares, which have struggled since the company floated on the market in 2018, fell heavily on the first reports of the rights issue and were down further today as the details emerged. The rights issue means Aston will issue 559 million new shares, offering four new shares for every one existing share, priced at 103p, a discount of 79% compared to Friday’s closing price.
The stock fell by over 11% in London on Monday to 427p. The shares made their market debut at 1900p.
AJ Bell investment director Russ Mould said: “The car manufacturer has been a flop since joining the stock market and one has to wonder if it would be better off as a privately-owned company.”
While Aston’s order books have been robust, with some marques selling out, supply chain problems have delayed the deliveries of its iconic sports cars. It has also burned capital coming up with an electric vehicle, with high research and development costs.