Aston Martin is over $1BN in debt and struggling to generate enough revenue to service its debt. It is in such a perilous state that even the banks are refusing to loan money. Aston Martin has three options, raise money privately, sell to the highest bidder or gracefully fall into bankruptcy. Sensibly Aston Martin decided to raise money through a share buyback scheme. But the money will not last because the company has a high burn rate. Over the summer, China’s Geely Motors stepped in and acquired 7.6% shares in Aston Martin helping to raise part of the $800BN lifeline the carmaker needed to survive.
Geely Motors is reported to be interested in raising its current shareholding from 7.6% to 10%. However this could face obstruction from the world’s poorest billionaire, Lawrence Stroll, and his existing shareholders and partners including Saudi Arabia’s PIF, Public Investment Fund. In July Geely, along with venture capitalists, Investindustrial proposed an equity investment of around $1.5BN.
Aston Martin rejected the approach and this caused the company’s flagging share value to decline a further 40%. Geely wants to leverage its state-of-the-art electric car technology to drive Aston Martin into the future in addition to making use of the company’s glamourous brand heritage.
However, it seems that the world’s poorest billionaire, Lawrence Stroll, once seen as the saviour of Aston Martin, is now becoming an impediment to the very survival of the company he so badly wants to save.
Geely Motors will eventually buy out Aston Martin, but only when the price is agreeable for the world’s poorest billionaire to accept.