Aston Martin Lagonda (LON:AML) today announced that Aston Martin Capital Holdings Limited has successfully completed the pricing of a private placement of $150,000,000 aggregate principal amount of 12% Senior Secured Notes due April 15, 2022, together with $100,000,000 of additional notes which could be issued if certain conditions are met, also due April 15, 2022. The Delayed Draw Notes are subject to a condition of 1,400 orders of the DBX being received within nine months of the Secured Notes issuance.
At the option of the company and if it decides it is beneficial, the company may issue the Delayed Draw Notes on the same terms as the Secured Notes to the extent it is permitted under the terms of its debt agreements. Otherwise, the company could issue all or part of the Delayed Draw Notes as unsecured notes, which will have an interest rate of 15%. On completion, the proceeds of the Secured Notes will be used to improve liquidity as well as repaying short-term borrowings and related transaction fees. The additional Delayed Draw Notes, if drawn, will further increase financial flexibility while continuing to invest in delivering the Second Century Plan. The company will continue to keep its strategic financing options under review as required.
Interest on the Senior Secured Notes will accrue at the rate of 12% per annum (comprising 6% per annum in cash plus 6% per annum paid as PIK Interest). Accordingly, the associated interest charge in the Income Statement in FY 2019 is expected to be c.£5m. If the Delayed Draw Notes are issued unsecured, the interest will accrue at the rate of 15% per annum (comprised of 6% per annum in cash plus 9% per annum paid as PIK interest). The following additional information has been disclosed to investors in connection with the private placement:
· As of 1 July 2019, there were 806 Orders in Production. Including the £66 million Adjusted EBITDA contribution for Orders in Production, Covenant EBITDA (see definitions) for the twelve months ended 30 June 2019 (excluding the impact of IFRS 16) would have been £222.5 million.
· The ratio of Pro Forma Net Covenant Debt to Covenant EBITDA is 3.2x and the ratio of Covenant EBITDA to Pro Forma Interest Expense is 2.9x (excluding the Delayed Draw Notes)
· Based on the performance since 30 June 2019 and despite continuing pressure on sales volumes, we expect to meet current analyst consensus for key financial metrics for FY 2019, subject to adjustments to reflect the impact of the issuance of the Secured Notes. Our capital expenditure for the full year 2020 is not expected to exceed £350 million.
Mark Wilson, Aston Martin Lagonda Chief Financial Officer, commented:
“At the H1 results we highlighted that we expected macroeconomic headwinds and uncertainty to continue. These circumstances require flexibility in our financing arrangements to ensure that resources are available to deliver the Second Century Plan. What we have announced today is a cost and time-effective structure that immediately strengthens our liquidity in the short term and the option to draw further funding as we successfully execute the plan.
The conditions on the Delayed Draw Notes are well within our order expectations. Aston Martin’s first SUV, the DBX, remains operationally on track and we are very pleased with the reception the car received at Monterey Car week during August.
Meanwhile, demand for our Special vehicles remains strong with the Aston Martin Valkyrie hypercar sold out and excess customer demand for the mid-engined Valhalla. Additionally, the DB4 GT Zagato Continuation cars are now in production and on track for delivery by the end of 2019.”