Aston Martin (LON: AML) (OTCPK: AMGDF) shares are down as they raise yet ever more capital. AML shares are of course significantly down from that original issuance price - which is when they first said that they now had enough capital to carry out the grand plan. And there have been a number of other issuances too - so, given how much capital they’ve been raising, when will be enough? The Aston Martin share price really does depend upon the answer to that question.
The latest fund raise from Aston Martin: “The proceeds from the Placing allow the Company to further deleverage its balance sheet, as well as providing an accelerated pathway towards achieving its net leverage ratio targets and becoming free cash flow positive from 2024, supported by a significant interest cost reduction. In addition to the Company's overall liquidity of c. £460 million at the end of H1 2023, the proceeds also support capital investments related to the Company's electrification strategy, consistent with its plans to invest c. £2 billion over the next five years (2023-2027). Through the Share Offering 58,245,957 new Ordinary Shares have been subscribed for raising gross proceeds of £216.1 million at a price of 371 pence per Ordinary Share (the "Placing Price") which represents a discount of 6.2% to closing share price of 395p on 31 July 2023.”
That’s a fair old chunk of new money there. But will it be enough?
Aston Martin share price from Google Finance
We’ve noted before that there are problems at Aston Martin: “The car business - not this corporate form, AML - has been bust 7 times already after all. It's a great brand, has value as that, but the actual business of making cars under that brand hasn't been a happy time for capital owners over the past century or so. The latest attempt to get Aston Martin back on the road hasn't run smoothly either. Ever since Lawrence Stoll brought it back to market at a now near unbelievable £4 billion valuation it's been downhill - with the occasional unsustained leap upward - since then.” And in at least one of the fund raises Stoll sold down his stake in Aston: “But there is a coda to the deal, which is that it also reduces the Yew Tree stake, which is partly where Lawrence Stroll's interest lies. So we have both a buy in and new capital and also a reduction in the stake of the controlling shareholder. “
This latest fund raise, well, it allows them to pay off the very expensive debt they were carrying. But we’re back to that same question. Does Aston Martin - yet - have enough capital to survive?