Aston Martin Lagonda Global Holdings Plc revealed it would need to tap into high-interest notes it was trying to avoid drawing down even after an injection of 536 million pounds ($663 million) cash from a consortium headed by tycoon Lawrence Stroll.
The British Luxury auto company does not have enough liquidity on the basis of the rules of the European Securities and Markets Authority because coronavirus has created an 'unquantifiable uncertainty' in its operations, Aston Martin disclosed in a statement.
That's made it very difficult for a "worse case downside" model to be created, the company stated. Shares of Aston Martin fell to 9.3 percent after the disclosure.
Stakeholders of Aston Martin decided on a financial restructuring plan presented by a group of capitalists spearheaded by the Canadian billionaire, during a meeting on Monday.
Stroll, who heads the Racing Point Formula One team and father of current driver Lance Stroll, originally agreed in January to pay $239 million for a 16.7 percent share in the venture, as well as to infuse $72.8 million in short-term financing.
The news has secured the future of producing the DBX, Aston Martin's first SUV, perceived to be the company's make or break vehicle. Chief Executive Officer Andy Palmer has said the DBX has more than 2,000 orders.
Nonetheless, despite the optimistic environment around the acquisition, Aston Martin Lagonda cautioned in a statement that the future was far from certain: "Taking into account the proceeds of the capital increase, the company estimates it will not have sufficient working capital to fulfill its requirements for 12 months after the original prospectus was released."
Notwithstanding the liquidity notice, the directors of Aston Martin said they were sure the company had ample access to the loans. This includes $100 million in overdue drawing notes released in October 2019 with an interest rate of at least 12 percent. In a statement Stroll said he and his co-investors will "continue to firmly believe in Aston Martin Lagonda's future."
Aston Martin said that because of the Covid-19 coronavirus it is in a very tight position, and without the latest funding it will not have the funds to finance the next four quarters of its business. The company has already partially suspended activities at its plants and because of the pandemic is about to furlough workers. The company pointed out it already has access to $184 million in credit lines should the situation get worse.
Aston's DBX deliveries are expected to begin in the summer. They will compete with premium brands like Lamborghini's Urus and the Bentley Bentayga, already established in the ultra-luxury sport utility vehicle market.
