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Aston Martin's Unexpected Implosion This Year Prompts Talks Of Capital Raises And Strategic Buyers

2019 07 31 14 43 25

The questions are starting to pile up for Aston Martin after the company’s ugly first half of the year, where it swung to a loss, according to Bloomberg.

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Recall, just days ago, we reported that the newly-listed company had slashed its sales forecast and saw its shares tumble as a result. The stock’s fall since its listing in October, combined with its operational challenges, have prompted speculation about capital raises and potentially becoming a takeover target. 

The company’s Chief Executive Officer Andy Palmer said on Wednesday: “It’s been a tough time for all of us, but we still believe that what we’ve done is the right thing for the brand.” 

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The company cut its outlook on sales to dealers by more than 10% last week and reported a 1H adjusted operating loss of 35.2 million pounds, versus a 64.4 million pound profit last year. The company blamed higher costs of expansion and lower vehicle pricing as pressures on its operations. It also noted that uncertainty over Brexit continues to loom over the head of the automaker. 

As the U.K. leaving the EU without an exit deal becomes likely, the company is preparing to face supply chain issues going forward.

Bernstein analyst Max Warburton said:

 “The company is now on a financial knife-edge. There’s now very, very little room for error or further external pressures, a serious worry given the potential trouble that could come from Brexit.” 

The company now sports a 1 billion pound market valuation, nearing the amount of its 723 million pounds in debt. Bank of America said on Tuesday that the company should consider a rights offering of up to 500 million pounds or cut its medium term outlook. 

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The struggles also open the door for a potential buyer, like InvestIndustrial, who is one of its largest shareholders. 

Chief Financial Officer Mark Wilson said Wednesday: 

“If we require some additional financing from sources with which we’re familiar, particularly in the debt market to maintain that capacity, then that’s what we’ll go out and do.”

A lot of the company’s success going forward will hinge on its new SUV, the DBX, which is set to launch next year.

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It’ll be built at a new plant in Wales and is a key part of the company’s goal to raise annual production to 14,000 per year by 2023. 


Source: zerohedge.com

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