# Aston Martin Lagonda begin legal proceedings against Nebula Project AG

- Link: https://www.directorstalkinterviews.com/aston-martin-lagonda-begin-legal-proceedings-against-nebula-project-ag/4121003018
- Published: 2021-06-22T08:11:24+01:00
- Author: Giles

**Aston Martin Lagonda Global Holdings plc** (LON:AML) has announced that it is 
filing for civil legal proceedings against Nebula Project AG and, with the support
of a group of its customers, criminal proceedings against its board members in order
for the prosecutor to investigate any potential criminal behaviour following the
failure to pay some customer deposits for Aston Martin Valkyrie programme orders
received by Nebula Project AG to the Company. The Company has also terminated the
underlying commercial agreement with Nebula Project AG.

Both Aston Martin and its customers have been impacted by Nebula Project AG’s and
its board members’ behaviour. Aston Martin is fully committed to supporting and 
working with those customers affected to ensure that they will still receive delivery
of their Valkyrie programme vehicles as scheduled, prioritising customer relationships,
despite the Company not having received all the deposited funds. There are no other
agreements like this in place and going forward the Company will ensure that all
deposits for special vehicles are received directly by Aston Martin, not through
a third party.

In 2016, the prior management team of Aston Martin entered into an arrangement with
Nebula Project AG to underpin the development of the Aston Martin Valkyrie and certain
other mid-engine programmes. Under the terms of this agreement Nebula Project AG
was to receive royalty payments, which could have been significant over time, linked
to production volumes of these programmes and Nebula Project AG meeting its funding
commitments. As a result of the termination of this commercial agreement with Nebula
Project AG, Aston Martin is no longer liable for any of these potential royalty 
payments.

The Company is today also terminating the dealership arrangements it had with AF
Cars AG, a company operating Aston Martin St.Gallen in Switzerland and managed by
the same board members as Nebula Project AG, after learning that vehicles have been
sold in breach of terms of the dealership agreement. The Company is focused on maintaining
service for customers as a priority with the four other dealers it has in Switzerland
operating as usual.

The net financial impact to Aston Martin of this extraordinary event is expected
to be positive over time, as the financial impact of not having received all the
deposited funds, is expected to be outweighed by the benefit from the termination
of the Nebula agreement and associated potential royalty payments. However, for 
the year ending 31 December 2021 it is expected to reduce both cashflow and EBITDA
by up to £15 million, including a provision of up to £5m of trade debtors. The Company
expects to book the provision in the second quarter and for the remaining impact
on cash flow and EBITDA to arise primarily in the fourth quarter. The Company is
confident that the net negative impact for 2022 can be managed within current expectations.

Aston Martin has performed well year-to-date during 2021, following the successful
completion of the supply to demand rebalance for GT/Sport cars, continuing excellent
progress on Project Horizon and with good forward visibility for both GT/Sport and
DBX.  Aston Martin Valkyrie is on track for first deliveries in the second half 
of the year.

Other than the short term negative financial impact of this issue, Aston Martin 
is on course to achieve its financial guidance for 2021 and remains confident in
achieving its medium-term targets of c.10,000 wholesales, c.£2bn revenue and c.£
500m adjusted EBITDA by 2024/25.

The Company will provide further updates on this issue and the legal proceedings
as appropriate.

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