18:00 Fri 31 Jan 2020
Aston Martin Lagonda - Issue of Equity
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO
Strategic equity investment of
to raise combined proceeds of
Operational and financial review leads to reset business plan
· A proposed placing of 45.6m new ordinary shares in the capital of the Company at a price of
· A subsequent proposed underwritten rights issue to raise
·
· The Consortium will irrevocably undertake to take up in full its rights under the Rights Issue, following completion of the Placing to it for a total equity investment of approximately
· The net proceeds from the proposed Placing and Rights Issue will be used to improve liquidity and finance the ramp up in production of DBX and the turnaround of the Company's performance.
As part of the investment from the Consortium:
·
· The Consortium, which will be led and controlled by
· The Consortium has indicated its intention to seek to increase its holding up to 20% of the issued share capital of the Company.
· As a condition of the Consortium's investment,
o Mrs
o In addition, the Consortium will have the right to appoint a further Board member for so long as its holding of voting rights of the Company is equal to or exceeds the lower of (i) 20% or (ii) the % holding that it has immediately upon completion of the Placing and upon completion of the Rights Issue, as applicable.
o During the turnaround the Board recognises that, in this special situation, it will continue not to be fully compliant with the
· Mid-engined cars are a core part of Aston Martin Lagonda's future. As part of this, an enhanced approach to F1TM is considered important. Aston Martin Lagonda and ventures affiliated to the Consortium have agreed to collaborate in pursuit of driving the successful execution of the reset plan:
o As part of this, Aston Martin Lagonda has entered into a legally binding termsheet under which the
o The agreement also includes a sponsorship arrangement from 2021 and for the subsequent four years with commercial terms commensurate with the Company's current annual F1TM expenditure, renewable for five years, subject to satisfying certain conditions at the time.
o For the 2020 F1TM season Aston Martin will continue with its proud sponsorship of the
o The technology partnership between Aston Martin Lagonda and Red Bull Advanced Technologies will continue until Aston Martin Valkyrie is delivered.
As announced on
· The Company is focusing on providing greater financial and operational stability and flexibility through controlling medium-term investment, improving cash generation and rephasing product cadence. Investment in electric vehicles will be delayed beyond 2025, however the mid-engined portfolio remains a key focus for the Company starting with Valhalla in 2022.
· To turn around the Company's performance, key priorities going forward are:
o Controlling production to prioritise demand over supply, to build a stronger order book and regain price positioning;
o Successfully launching DBX in Q2, which has received extremely positive media reviews and a rapidly building order book since opening in
o Successfully relaunching Vantage including the Roadster derivative in the spring of 2020 and starting Aston Martin Valkyrie deliveries later in the year;
o Reducing the operating cost base by
o Improving the cash flow profile of the business and transitioning towards a business generating positive free cash flow over the medium term
Commenting on the announcement,
"The difficult trading performance in 2019 resulted in severe pressure on liquidity which has left the Company with no alternative but to seek substantial additional equity financing. Without this the balance sheet is not robust enough to support the operations of the group. Notwithstanding recent weak trading, the strength of the Aston Martin brand and our expanding portfolio of cars has allowed us to attract a strong new partner in
Dr
"As we announced on
We are focused on turning around performance, restoring price positioning and delivering a more efficient operational footprint. We will deliver some exciting new products this year with the much-anticipated DBX during Q2, Vantage Roadster in the spring and Aston Martin Valkyrie deliveries starting in H2.
We have also announced plans to leverage a new motorsport collaboration with
The actions announced today will allow us to implement and deliver on our reset plan and provide Aston Martin Lagonda with a sustainable platform for the future."
"I am very pleased that I, and my partners in the Consortium, have reached agreement with the Board and major shareholders to make this significant long-term investment. Aston Martin Lagonda makes some of the world's most iconic luxury cars, designed and built by very talented people. Our investment announced today underpins the Company's financial security and ensures it will be operating from a position of financial strength.
On completion of the
I, and my partners, firmly believe that Aston Martin is one of the great global luxury car brands. I believe that this combination of capital and my experience of both the motor industry and building highly successful global brands will mean that, over time, we fulfil Aston Martin Lagonda's potential."
Operational and financial review
2019 was a disappointing year with trading weaker than anticipated, particularly for Vantage and in
Consequently, achieving the retail sell through to start to de-stock the dealer network required more retail and customer financing support than planned, weighing on average selling price. Despite retail sales increasing by 12% year-on-year this was not high enough to support our own expectation and as a result we were unable to wholesale cars in the volumes that were planned. As a result of lower than planned wholesales in H1 company stock remained elevated at
Whilst dealer stocks at
Finally, costs were higher than planned due to a combination of incremental marketing campaigns in December, particularly in the US and in support of DBX launch activities, alongside headcount and other SG&A costs falling short of savings targets.
DB11 and DBS Superleggera have performed well and have grown market share in recent years but have not been immune to the challenging trading conditions experienced in 2019. Despite gaining share in a declining segment, which was down a double-digit percentage for the year to November, the Vantage underperformed versus original expectations, particularly in
DBX start of production in Q2 2020 expands the range into a new and growing segment. As confirmed on
Spring 2020 will also see the launch of the Vantage Roadster, a variant expected to generate c.40% of Vantage sales mix over the life of the model.
The timing of future product launches has been reviewed to control medium-term investment requirements, improve cash generation and provide greater financial stability and flexibility:
· Aston Martin's mid-engined core car (Vanquish) is now expected to be revealed following the unveiling of the Valhalla in 2022.
· Development of a fuel efficient, modular V6 engine with hybrid capabilities continues, which will support Aston Martin core cars being available as hybrid variants from the mid-2020s.
· The Lagonda brand will now be relaunched no earlier than 2025 (previously 2022) and while development of Rapide E is substantially complete, the programme has been paused pending a review (previously deliveries had been expected to start in 2020).
Specials continue to be a key component of the reset plan
· Production of the Aston Martin Valkyrie is still expected to ramp up through H2 2020
· Deliveries of the Goldfinger DB5 Continuations are due to start in 2020 as well as the DBS GT Zagatos, which will complete the DBZ Centenary Collection
· The recently announced V12 Speedster will be unveiled later this year with deliveries due to start in Q1 2021
· The Aston Martin Valkyrie AMR Pro is still expected to be revealed in 2021
· Valhalla is now expected to be unveiled in 2022
· New specials which have not yet been revealed will comprise the balance of one heritage Special and two contemporary Specials each year.
Operating structure
· Restructuring sees changes in management of Sales,
· Further to the significant reduction in contractors, a voluntary redundancy and early retirement programme actioned in 2019, additional reductions will be made to rebalance our permanent and contractor headcount, while 300 new roles will be created at the St Athan facility in addition to the 300 employees currently at the site
· The property footprint will also reduce alongside general SG&A reductions commensurate with our financial and operational ambitions
· These changes are expected to yield
· Efficiencies in manufacturing costs are expected to be delivered through improved supply chain management and ongoing designed-in initiatives.
The actions announced today are expected to provide Aston Martin Lagonda with a platform to be able to execute the reset plan and to serve all its stakeholders including customers, employees, the pension scheme and shareholders.
Outlook
· As communicated on
· With respect to FY 2020: Capex is expected to be c.
The opportunity remains to expand margin and increase free cash flow. A more fulsome update on mid-term guidance will be provided in due course.
This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is being released on behalf of
The financial information contained herein is unaudited.
All metrics and commentary in this announcement exclude adjusting items unless stated otherwise and certain financial data within this announcement have been rounded
Enquiries
Investors and Analysts
charlotte.cowley@astonmartin.com
Media
Kevin Watters Director of Communications +44 (0)7764 386683
Toby Bates Senior Adviser, Financial Communications +44 (0)7584 773837
Grace Barnie Corporate Communication Manager +44 (0)7880 903490
Brunswick
Dan Roberts, Andrew Porter, Diana Vaughton +44 (0)20 7404 5959
astonmartin@brunswickgroup.com
Morgan Stanley (Sole Financial Adviser to Aston Martin Lagonda) +44 (0)20 7425 8000
Andrew Foster
Mark Rawlinson
Anthony Zammit
Martin Thorneycroft
Matt Hall
Saadi Soudavar
Reinhard Kuehn
Mark Hankinson
J.P. Morgan Cazenove (Joint Corporate Broker to Aston Martin Lagonda) +44 (0)20 7742 4000
Robert Constant
Virginia Khoo
Luca Santini
Alex Watkins
Simon Pilkington, Harry Cameron, Martin Robinson
Barclays (Financial Adviser to
Derek Shakespeare
Enrico Chiapparoli
Gaurav Gooptu
Darren Johnson
Investor and analyst update call
· There will be a call for investors and analysts today at
· The conference call can be accessed live via a dial-in facility on +44 (0) 2071 928016; PIN: 9078980#, please find more details on the corporate website https://www.astonmartinlagonda.com/investors
· Preliminary Results for FY 2019 are currently scheduled to be announced on
Notes to editors
About Mr. Stroll
Mr. Stroll has a great deal of experience and success in building some of the world's most prominent luxury brands such as Tommy Hilfiger and Polo Ralph Lauren, and notably led the IPO of Michael Kors which went on to enjoy further strong growth as a publicly listed company. Mr. Stroll has also been for many years an active investor in the racing and luxury car industry, historically including the Ferrari dealership in Quebec and Circuit Mont-Tremblant and currently the Racing Point Formula 1TM team.
There are no additional matters that would require disclosure under LR9.6.13R (1) to (6) in respect of Mr. Stroll.
Expected timetable for Placing and Rights Issue
The Placing and Rights Issue are expected to launch following the publication of the Aston Martin Lagonda Preliminary Results for FY 2019.
Shareholder approval of the Placing and Rights Issue
The Company will seek the approval of its shareholders for the Placing and Rights Issue at a general meeting of the Company (the "General Meeting").
The Company expects to publish a combined circular and prospectus (the "Combined Circular and Prospectus") which will contain notice of the General Meeting and further information on the Placing and Rights Issue in Q1 2020.
The Aston Martin Lagonda Directors intend unanimously to recommend that Aston Martin Lagonda shareholders vote in favour of all Resolutions in the Combined Circular and Prospectus, as the Aston Martin Lagonda Directors intend to do in relation to their beneficial holdings.
In addition, the Major Shareholders have irrevocably undertaken to vote in favour of all Resolutions to approve the Placing and Rights Issue to be proposed at the General Meeting in relation to their holdings, which amount, in aggregate to approximately c.61% of Aston Martin Lagonda's issued ordinary share capital as at the date of this announcement.
Summary of transaction documents
Binding Transaction Agreement
The Company has today entered into a binding transaction agreement with Yew Tree. Pursuant to this agreement, the parties agree to use reasonable endeavours to negotiate in good faith and finalise all definitive documentation required to implement the Consortium's participation in the Placing and Rights Issue (including a placing agreement, a relationship agreement and an appointment letter for Mr. Stroll) and to enter into such definitive documentation immediately prior to the release of the announcement formally launching the Placing and Rights Issue. The agreement appends a placing agreement, a relationship agreement and an appointment letter in substantially agreed forms.
The transaction agreement is subject to certain conditions including the Company filing its audited accounts for the financial year ended
The agreement also contains certain rights of termination including, among other things, for material adverse change and where a competing proposal is recommended by the Company's board of directors or completes, becomes effective or is declared or becomes unconditional in all respects.
Placing agreement
It is proposed that the Company and the Consortium enter into a placing agreement immediately prior to the formal announcement of the Placing and Rights Issue. Pursuant to the placing agreement, the Consortium will agree to subscribe for 45,600,577 new ordinary shares under the Placing and take up its rights in full under the Rights Issue.
The placing agreement will be conditional upon, among other things, the formal approval of the Combined Circular and Prospectus by the
The placing agreement will contain customary warranties and undertakings from the Company typically included in a placing agreement.
The placing agreement will also contain certain customary termination rights for, including, among other things, material adverse change, breach of warranty and a competing proposal being recommended by the Company's board of directors or completing, becoming effective or being declared or becoming unconditional in all respects.
F1TM
Aston Martin Lagonda has entered into an arrangement under which the
Further details will be contained in the Combined Circular and Prospectus when published including in relation to the relationship agreement with the Consortium, the F1TM sponsorship arrangement and Mr. Stroll's appointment letter.
This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not
be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.
No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information presented or contained in this release. This release contains certain forward-looking statements, which are based on current assumptions and estimates by the management of
Aston Martin Lagonda provides no guarantee that future development and future results achieved will correspond to the forward-looking statements included here and accepts no liability if they should fail to do so. Aston Martin Lagonda undertakes no obligation to update these forward-looking statements and will not publicly release any revisions that may be made to these forward-looking statements, which may result from events or circumstances arising after the date of this release.
This release is for informational purposes only and does not constitute or form part of any invitation or inducement to engage in investment activity, nor does it constitute an offer or invitation to buy any securities, in any jurisdiction including the United States, or a recommendation in respect of buying, holding or selling any securities.
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