REG - Aston Martin Lagonda - Proposed New Equity Financing and Investment

Aston Martin Lagonda Global HoldingsAnnouncement

15/07/2022 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220715:nRSO5867Sa&default-theme=true

RNS Number : 5867S  Aston Martin Lagonda Global Hld PLC  15 July 2022

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR
INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, CHINA OR SOUTH AFRICA OR
ANY OTHER JURISDICTION WHERE SUCH ACTIVITY WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF
SECURITIES IN ANY JURISDICTION. THE INFORMATION CONTAINED HEREIN DOES NOT
CONSTITUTE OR FORM PART OF ANY OFFER TO ISSUE OR SELL, OR ANY SOLICITATION OF
ANY OFFER TO SUBSCRIBE OR PURCHASE, ANY INVESTMENTS IN ANY JURISDICTION.

15 July 2022

 

Aston Martin Lagonda Global Holdings plc

 

Proposed New Equity Financing and Strategic Investment by the Public
Investment Fund ("PIF")

Aston Martin Lagonda Global Holdings plc ("Aston Martin", "Aston Martin
Lagonda" or the "Company") today provides the following market update

·   £653m. proposed equity capital raise with the proceeds used to
meaningfully de-leverage the balance sheet, strengthen and accelerate
long-term growth

·   Leading global investment fund, PIF, to become a new anchor investor
and the second largest shareholder

·     PIF, the Yew Tree Consortium and Mercedes-Benz AG to invest c.
£335m in total

·    Proposed equity capital raise provides clear pathway for significant
shareholder value creation with pro-forma cash of £500 - 600m post debt pay
down, driving Aston Martin's growth ambitions and supporting positive free
cash flow generation from 2024

·     FY 2022 outlook reaffirmed in H1 trading update with strong demand
trends continuing

·     Company also announces the Board's rejection of Atlas Consortium
Proposal

 

Proposed Equity Capital Raise

The Company announces its intention to undertake a proposed equity capital
raise (the "Capital Raise") to meaningfully deleverage the balance sheet,
strengthen and accelerate its long-term growth. The Company confirms the
following plans for a linked primary issuance of shares, subject to
shareholder and regulatory approvals:

·    a proposed placing of approximately 23.3 million new ordinary shares
at a price of £3.35 per ordinary share in the capital of the Company to PIF
(the "Placing Shares"), conditional upon the subsequent underwritten rights
issue, to raise approximately £78.0 million (the "Placing"), representing
approximately 16.7% of the post-placing share capital of the Company; and

·   a subsequent underwritten rights issue to raise approximately £575
million (the "Rights Issue" and, together with the Placing, the "Capital
Raise").

The Company intends to use the net proceeds from the Capital Raise for the
following purposes:

       ·      up to half to repay existing debt, strengthening financial resilience and improving the company's cash                  flow generation by reducing its interest costs;

·   the balance to maintain a substantial liquidity cushion to underpin and
accelerate future capital expenditure, and to support execution of its targets
in what remains a challenging operating environment, impacted by the war in
Ukraine, COVID-19 lockdowns in China, as well as continued supply chain and
logistics disruptions

 

The Capital Raise has been in development for some time, and follows a
comprehensive Board review of the Company's optimal capital structure and
growth capital requirements over the medium-term and beyond, as well as the
debt reduction required in order to achieve a net debt leverage ratio of c.
1-1.5x by 2024/25.

Over the coming years, Aston Martin's capital expenditure profile, enhanced by
this Capital Raise, will focus on:

 

·      next year's next-generation front-engine sports cars, and
furthering the DBX offering,

·      the development of the Group's high margin mid-engine vehicles,
including the Valhalla special edition,

·      its electric platform for future sports cars/GTs and SUVs,
working towards the following timelines:

 

o     2024: First PHEV targeted for delivery

o     2025: First BEV targeted for launch

o     2030: Fully electrified GT/Sport and SUV portfolio

 

The Board believes the proposed Capital Raise will serve to further support
the Company's re-affirmed medium-term targets of c. 10,000 wholesales, c.
£2bn revenue and c. £500m adjusted EBITDA by 2024/25, and strongly positions
it for positive FCF generation from 2024.

 

The specific terms and conditions of the Capital Raise will be announced by
the Company in due course. The Company expects to separately publish a
circular (the "Circular") in mid-August, which will contain notice of the
General Meeting of the Company (the "General Meeting") required in connection
with the Capital Raise, which it is expected will take place in early
September and at which the Company will seek approval from its shareholders.
It is expected that a prospectus, (the "Prospectus") containing further
information on the Capital Raise will also be published in early September and
in any event before the General Meeting and that completion of the Capital
Raise will take place by the end of September.

In connection with the Capital Raise, the Company confirms that:

·  PIF has entered into a binding transaction agreement with the Company on
the date of this announcement. Pursuant to this agreement, PIF and the Company
agree to use reasonable endeavours to negotiate in good faith and finalise all
definitive documents in relation to PIF's participation in the Capital Raise,
and to enter into such definitive documents immediately prior to announcement
of the Capital Raise. PIF's participation in the Placing remains subject to
customary conditions, in addition to the Rights Issue being fully underwritten
ahead of launch;

·     PIF will also have the right, subject to owning more than 7% of
the Company's voting rights, to  a Non-Executive Director seat as a
Shareholder Representative on the Aston Martin Board of Directors, and the
right to a second Non-Executive Director seat provided that PIF owns more than
10% of the Company's voting rights;

·      Goldman Sachs International acted as sole Financial Adviser to
PIF;

·    Yew Tree Overseas Limited (on its own behalf and in its capacity as
Representative Shareholder on behalf of the members of the Yew Tree
Consortium, being Yew Tree Overseas Limited, Saint James Invest SA, J.C.B.
Research, RRRR Investments LLC, John Idol, Francinvest Holding Corporation,
ErsteAM Ltd and Omega Funds I Limited) which owns approximately 22.0% of the
issued share capital of the Company as at the date of this announcement and
which is expected to own approximately 18.3% following the proposed Placing,
has irrevocably agreed to: (a) vote in favour of the Capital Raise at the
General Meeting; and (b) take up in full its entitlement to shares to be
issued in the Rights Issue for a total equity investment of £105.3 million;

·      Mercedes-Benz AG which owns approximately 11.7% of the issued
share capital of the Company as at the date of this announcement and which is
expected to own approximately 9.7% following the proposed Placing has
irrevocably agreed to: (a) vote in favour of the Capital Raise at the General
Meeting; and (b) take up in full its entitlement to shares to be issued in the
Rights Issue for a total equity investment of £56.0 million;

·    The Company continues to enjoy a long-term strategic relationship
with MBAG as evidenced by their proposed investment and our planned deployment
of MBAG technologies, accessed via tranche 1 of the Strategic Cooperation
Agreement (the "SCA"), in new product ranges delivered 2022 through 2025. The
strength of relationship makes it natural that the Company is exploring a BEV
partnership with them, as it has the option to via tranche 2 of the SCA,
subject to reaching a commercial agreement, which would be targeted for the
benefit of financial year 2026 and onwards. The Company would note that the
structure and terms of the SCA may be amended in due course, having regards to
the best interests of the Company, to better reflect Aston Martin's planned
BEV time horizons and the impact of the Capital Raise.

·  In addition, the Company has entered into a standby underwriting letter
on the date of this announcement with J.P. Morgan Securities plc (which
conducts its UK investment banking business as J.P. Morgan Cazenove) and
Barclays Bank PLC (the "Banks"), pursuant to which the Banks have agreed to
underwrite on a standby basis the Rights Issue up to £318 million, which
excludes the shares undertaken to be taken up by PIF, Yew Tree Overseas
Limited and Mercedes-Benz AG. The standby underwriting letter contains
customary representations and warranties, conditions and termination rights,
and the Rights Issue will be subject to customary conditions.

 

H1 2022 trading update

Aston Martin is pleased to reaffirm its 2022 outlook with strong demand trends
continuing:

·    The Company continued to benefit from strong demand across its
product lines, with GT/Sports cars fully sold out into 2023 and order intake
for DBX more than 40% higher year-on-year

·    Despite supply chain disruption impacting the timing of early DBX
707 deliveries in Q2, order intake remains robust and in-line with
expectations

·   As noted above, supply chain and logistics disruptions, including
COVID-19 lockdowns in China, impacted wholesale volumes, most notably DBX
deliveries in Q2

-  H1 wholesale volumes of 2,676 (H1 2021: 2,901)

·    Wholesale ASP continued to increase year-on-year, supported by
strong pricing dynamics throughout the core portfolio, as well as FX tailwinds

·     Initial deliveries of the fully sold out V12 Vantage run of 333
cars commenced in Q2, with expected H2 ramp supportive of gross margin
progression

·      27 Aston Martin Valkyrie deliveries in H1 2022. Production rates
continued to increase with 38 vehicles assembled in H1 and the Company remains
on track to achieve its full year target range (75-90)

·   Given FX movements during the period, the Company anticipates a
further FX revaluation impact (mostly non-cash) on its dollar denominated debt

·    In addition to its planned capital expenditure in H1 2022 and cash
interest payment in Q2 2022, the Company's H1 free cash flow and cash balance
was highly impacted by elevated working capital outflows related to supply
chain and logistics disruptions, as well as movements in the level of usage of
the revolving credit facility at the end of the period. The Company expects
cashflows from working capital to significantly improve in the second half of
the year

·     The Company continues to trade in line with expectations for full
year 2022 and reaffirms its operational financial guidance for the year as
follows:

-  Wholesales: growth to > 6,600 units

-  Adjusted EBITDA margin:  c.350-450bps expansion

-  Capex and R&D: c.£300m

-  Depreciation and amortisation: c.£315m-£330m

 

The Company's Interim Results for the six months to 30 June 2022 will be
announced on 29 July 2022

 

 

 

 

 

 

Atlas Consortium Proposal

On 8 July 2022, the Company received a proposal (the "Proposal") from
Investindustrial Group Holdings S.à r.l. ("InvestIndustrial") and Geely
International (Hong Kong) Limited ("GIHK") (Investindustrial and GIHK together
being referred to the "Atlas Consortium") for an equity investment of up to
£1.3 billion in aggregate into the Company comprising of a £203 million firm
placing and subsequent £1,105 million underwritten rights issue (pursuant to
which the Atlas Consortium would take up its pro rata rights for approximately
£300 million and underwrite, subject to relevant regulatory and shareholder
approvals, any residual shares not taken up by existing shareholders.)

The Board of Aston Martin considered the Proposal carefully in the light of
the Company's current financial performance and future capital requirements.
Having done so, the Board does not believe that the Proposal presented an
attractive funding option or value creation opportunity for existing
shareholders. Accordingly, the Board unanimously rejected the Proposal and
believes there is no basis for further discussion.

The Board of Aston Martin believes that the Proposal markedly overestimated
the Company's new equity capital requirements, would have been heavily
dilutive for existing shareholders, and comprised a number of execution
obstacles.

Furthermore, the structure of the Proposal and the nature of its delivery are
such that the Board of Aston Martin considered this an attempt by the Atlas
Consortium to acquire a controlling and prospectively majority ownership
position without any premium paid to existing shareholders.

Commenting on this announcement, Lawrence Stroll, Executive Chairman of the
Board, said:

"Today's announcement marks the latest success in the evolution of Aston
Martin, the restoration of the business and balance sheet we inherited, and
the acceleration of our long-term growth potential. Since I became Executive
Chairman in 2020, we have made significant progress on our journey to become
the world's most desirable, ultra-luxury British performance brand.

We started by fixing the core fundamentals of the Company, successfully
de-stocking the dealer network to rebalance supply to demand, optimising
inventory levels aligned for an ultra-luxury business, and now benefit from
the strongest order book we have seen in many years. We also signed a
strategic co-operation agreement with Mercedes-Benz and have developed a
breathtaking pipeline of products, starting with the DBX707 and V12 Vantage,
all of which are aligned with our 40%+ contribution margin targets - a
significant increase from the past.

Aston Martin's return to the pinnacle of motorsport with the Aston Martin
Aramco Cognizant Formula One(TM) team, has also ushered in a new era for our
iconic British brand. Our focus on building brand equity and unleashing the
potential of Aston Martin is already delivering growing demand from a new
generation of customers, with more than 60% new to the brand in 2021.

I am delighted to welcome the Public Investment Fund as a new anchor
shareholder in the Company, alongside my consortium. We have a shared vision
and our joint participation in this important strategic financing demonstrates
both our confidence in the prospects for the Company and our commitment to the
future success of Aston Martin.

I would also like to thank Mercedes-Benz for their continued support and
investment as well as the strong long-term partnership we have created.

Overall, this is a game changing event for Aston Martin, supporting the
delivery of our strategic plans and accelerating our long-term growth
potential. 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. With the new leadership
team in place, led by Amedeo Felisa, we have the right team and the right
strategy to fully realise the long-term potential of Aston Martin."

 

 

Appointment of Corporate Broker

Aston Martin also announces the appointment of Barclays Bank PLC ("Barclays")
as its joint Corporate Broker, alongside J. P. Morgan Securities PLC, with
immediate effect.

 

Other information

This announcement includes inside information as defined in Article 7 of the
UK Market Abuse Regulation No. 596/2014 as it forms part of domestic law by
virtue of the European Union (Withdrawal) Act 2018 and is being released on
behalf of the Company by Liz Miles, Company Secretary.

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.

Conference Call

·      There will be a call for investors and analysts today at 08:30am

·      The conference call can be accessed live via the corporate
website  https://www.astonmartinlagonda.com/investors/calendar
(https://www.astonmartinlagonda.com/investors/calendar)

·      A replay facility will be available on the website later in the
day

·      Interim Results for the six months to 30 June 2022 will be
announced on 29 July 2022

 

Enquiries

 Investors and Analysts
 Sherief Bakr                              Director of Investor Relations              +44 (0)7789 177547

sherief.bakr@astonmartin.com

 Holly Grainger                            Deputy Head, Investor Relations             +44 (0)7442 989551

holly.grainger@astonmartin.com

 Media
 Kevin Watters                             Director of Communications                  +44 (0)7764 386683

kevin.watters@astonmartin.com

 Paul Garbett                              Head of Corporate and Brand Communications  +44 (0)7501 380799

paul.garbett@astonmartin.com

 Grace Barnie                              Corporate Communications Manager            +44 (0)7880 903490

grace.barnie@astonmartin.com

 Tulchan Communications
 Harry Cameron and Simon Pilkington                                                    +44 (0)20 7353 4200

 J.P. Morgan Cazenove (Lead Financial Adviser, Joint Global Coordinator, Joint
 Bookrunner, Sole Sponsor and Corporate Broker)

 Robert Constant                                                                       +44 (0)20 7742 4000

 James A. Kelly

 Will Holyoak

 Barclays (Financial Adviser, Joint Global Coordinator, Joint Bookrunner and
 Corporate Broker)

 Enrico Chiapparoli                                                                    +44 (0) 20 7623 2323

 Lawrence Jamieson

 Alastair Blackman

 Arthur Schuetz

 

 

 

 

Notes to editors

About PIF

The Public Investment Fund ("PIF") is one of the largest and most impactful
sovereign wealth funds in the world. Since 2015, when the Board was
reconstituted and oversight transferred to the Council of Economic and
Development Affairs, the Fund's board of directors has been chaired by HRH
Prince Mohammed bin Salman Al Saud, Crown Prince, Deputy Prime Minister and
Chairman of the Council for Economic and Development Affairs. As of April
2022, PIF's Assets Under Management have reached more than $620 billion (over
2.3 trillion Saudi Riyals). The Fund plays a leading role in advancing Saudi
Arabia's economic transformation and diversification, as well as contributing
to shaping the future of the global economy. Since 2017, the Fund has
established 54 companies and created, directly and indirectly, more than
500,000 jobs as at the end of 2021.

PIF is building a diversified portfolio by entering into attractive and
long-term investment opportunities in 13 strategic sectors in Saudi Arabia and
globally. The Fund's strategy, as set out in the PIF Program 2021-2025 - one
of the Vision 2030 realization programs - aims to enable many promising
sectors and contribute to increasing local content by creating partnerships
with the private sector, in addition to injecting at least 150 billion riyals
annually into the local economy. PIF works to transfer technologies and
localize knowledge to build a prosperous and sustainable economy in Saudia
Arabia. As the investment arm of Saudi Arabia, the Fund looks to make unique
investments, and is building strategic alliances and partnerships with
prestigious international institutions and organizations, which contribute to
achieving real long-term value for the Kingdom in line with the objectives of
Vision 2030. PIF has also created an operational governance model that
reflects its main tasks and objectives, in line with best international
practices. Applying this model of governance enhances the level of
transparency and effectiveness in decision-making and future progress.

More information about PIF can be found at
(https://eur01.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.pif.gov.sa%2F&data=05%7C01%7Csherief.bakr%40astonmartin.com%7Cfc2d67b41ad44b1ec4bd08da65c19888%7C63ab48267a7348169bc13934580f4485%7C1%7C0%7C637934179547483308%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=CGeCTXQdUWqoCWcJpkS2C3%2FCESZi2CJdhBTkHJ8dCjU%3D&reserved=0)
www.pif.gov.sa (https://www.pif.gov.sa/en/Pages/Homepage.aspx)

Media Contact: media@pif.gov.sa (mailto:media@pif.gov.sa)

 

 

 

 

 

 

IMPORTANT NOTICES

This announcement is not for publication or distribution, directly or
indirectly, in or into the United States of America. This announcement does
not contain or constitute an offer for sale or the solicitation of an offer to
purchase securities in the United States. No securities referred to herein
have been or will be registered under the US Securities Act of 1933 (the
"Securities Act") or under any securities laws of any state or other
jurisdiction of the United States and such securities may not be offered,
sold, taken up, exercised, resold, renounced, transferred or delivered,
directly or indirectly, within the United States except pursuant to an
applicable exemption from or in a transaction not subject to the registration
requirements of the Securities Act and in compliance with any applicable
securities laws of any state or other jurisdiction of the United States. No
public offering of securities is being made in the United States. No
securities referred to herein, nor this announcement nor any other document
connected with the proposed transactions referred to herein has been or will
be approved or disapproved by the United States Securities and Exchange
Commission or by the securities commissions of any state or other jurisdiction
of the United States or any other regulatory authority, and none of the
foregoing authorities or any securities commission has passed upon or endorsed
the merits of the proposed transactions or the securities referred to herein
or the adequacy of this announcement or any other document connected with the
proposed transactions referred to herein. Any representation to the contrary
is a criminal offence in the United States.

This announcement is for information purposes only and is not intended to and
does not constitute or form part of any offer or invitation to purchase or
subscribe for, or any solicitation to purchase or subscribe for any securities
in any jurisdiction. No offer or invitation to purchase or subscribe for, or
any solicitation to purchase or subscribe for, any securities will be made in
any jurisdiction in which such an offer or solicitation is unlawful. The
information contained in this announcement is not for release, publication or
distribution to persons in the United States or Australia, Canada, Japan, the
People's Republic of China or the Republic of South Africa, and should not be
distributed, forwarded to or transmitted in or into any jurisdiction, where to
do so might constitute a violation of local securities laws or regulations.

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 the Company. Past performance cannot be relied
upon as a guide to future performance and should not be taken as a
representation that trends or activities underlying past performance will
continue in the future. Such statements are subject to numerous risks and
uncertainties that could cause actual results to differ materially from any
expected future results in forward-looking statements. These risks may
include, for example, changes in the global economic situation, and changes
affecting individual markets and exchange rates.

The Company 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. The Company 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.

This announcement is an advertisement for the purposes of the Prospectus
Regulation Rules of the Financial Conduct Authority ("FCA") and not a
prospectus and not an offer to sell, or a solicitation of an offer to
subscribe for or to acquire securities. Neither this announcement nor anything
contained herein shall form the basis of, or be relied upon in connection
with, any offer or commitment whatsoever in any jurisdiction. Investors should
not purchase or subscribe for any transferable securities referred to in this
announcement except on the basis of information contained in the Prospectus to
be published by the Company in due course.

J.P. Morgan Securities plc (which conducts its UK investment banking business
as J.P. Morgan Cazenove) is authorised by the Prudential Regulation Authority
(the "PRA") and regulated by the PRA and FCA. J.P. Morgan Cazenove is acting
for the Company and no other person in connection with this announcement and
the proposed transactions described herein and will not be responsible to
anyone other than the Company for providing the protections afforded to
clients of J.P. Morgan Cazenove nor for providing advice to any person in
relation to the proposed transactions described herein or any other matter
referred to in this announcement.

Barclays Bank PLC, acting through its investment bank ("Barclays"), which is
authorised by the PRA and regulated in the United Kingdom by the FCA and the
PRA, is acting for the Company and no other person in connection with this
announcement and the proposed transactions described herein and will not be
responsible to anyone other than the Company for providing the protections
afforded to clients of Barclays nor for providing advice to any person in
relation to the proposed transactions described herein or any other matter
referred to in this announcement.

None of J.P. Morgan Cazenove nor Barclays, nor any of their respective
subsidiaries, branches or affiliates, nor any of their respective directors,
officers or employees owes or accepts any duty, liability or responsibility
whatsoever (whether direct or indirect, whether in contract, in tort, under
statute or otherwise) to any person who is not a client of J.P. Morgan
Cazenove or Barclays in connection with this announcement, any statement
contained herein, or otherwise.

 

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  IOEGGGDRGXBDGDU