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.
How can I protect myself from the coronavirus outbreak?
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
- Avoid direct, unprotected contact with live animals and surfaces in contact with animals when visiting live markets in affected areas
- Avoid eating raw or undercooked animal products and exercise care when handling raw meat, milk or animal organs to avoid cross-contamination with uncooked foods.
Despite a surge in sales of face masks in the aftermath of the coronavirus outbreak, experts are divided over whether they can prevent transmission and infection. There is some evidence to suggest that masks can help prevent hand-to-mouth transmissions, given the large number of times people touch their faces. The consensus appears to be that wearing a mask can limit – but not eliminate – the risks, provided it is used correctly.
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.”
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