By Mario Marroquin
In an effort to significantly deleverage its balance sheet
and address liquidity constraints for future growth, U.K. auto manufacturer
Aston Martin Lagonda and Saudi Arabia’s Public Investment Fund agreed to a £653
million ($775 million) equity stake program.
Under the terms of the agreement published July 15, PIF will
become the second-largest shareholder in Aston Martin by receiving 23.3 million
common shares at $3.97 per share. Majority shareholder the Yew Tree Consortium
and shareholder Mercedez-Benz AG agreed to the equity proposal and will invest
an aggregate of $305 million alongside PIF, Aston Martin reported.
A release from Aston Martin said proceeds from the equity
program will enable the manufacturer to tackle the following long-term goals:
·
Front-engine sports cars and enhancements to
Aston Martin’s DBX SUV offering
·
Development of high margin mid-engine vehicles
·
Build out its electric platform for sports cars
and SUVs
“This is a game-changing event for Aston Martin, supporting
the delivery of our strategic plans and accelerating our long-term growth
potential,” Aston Martin Executive Chairman Lawrence Stroll said in a prepared
statement. “It transforms our balance sheet, liquidity and cashflow profile and
provides greater clarity on our pathway to become sustainably free cash flow
positive and create significant shareholder value.”
Aston Martin mentioned in the same press release that its
board unanimously rejected the $1.54 billion equity investment proposal from
Investindustrial Group Holdings and Geely International Hong Kong Limited filed
July 8.
The board of Aston Martin said it believed the proposal
overestimated the company’s equity capital requirements and would have a significant
dilutive effect for existing shareholders.
PIF is also a majority shareholder in California-based
electric vehicle manufacturer Lucid Group. In July 2021, the $620 billion AUM
sovereign wealth fund acquired an equity stake in McLaren as part of a $652 million
equity stake sale.