TIDMAML
RNS Number : 5867S
Aston Martin Lagonda Global Hld PLC
15 July 2022
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
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THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN
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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
-- GBP653m. 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. GBP335m in total
-- Proposed equity capital raise provides clear pathway for
significant shareholder value creation with pro-forma cash of
GBP500 - 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 GBP3.35 per ordinary share in the capital of
the Company to PIF (the "Placing Shares"), conditional upon the
subsequent underwritten rights issue, to raise approximately GBP
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
GBP 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. GBP2bn revenue and c. GBP500m 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 GBP105.3 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 GBP56.0 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 GBP318 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.GBP300m
- Depreciation and amortisation: c.GBP315m-GBP330m
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 GBP1.3 billion in
aggregate into the Company comprising of a GBP203 million firm
placing and subsequent GBP1,105 million underwritten rights issue
(pursuant to which the Atlas Consortium would take up its pro rata
rights for approximately GBP300 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
-- 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 +44 (0)7501 380799
Communications paul.garbett@astonmartin.com
Grace Barnie Corporate Communications +44 (0)7880 903490
Manager 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
James A. Kelly
Will Holyoak +44 (0)20 7742 4000
Barclays (Financial Adviser, Joint
Global Coordinator, Joint Bookrunner
and Corporate Broker)
Enrico Chiapparoli
Lawrence Jamieson
Alastair Blackman
Arthur Schuetz +44 (0) 20 7623 2323
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 www.pif.gov.sa
Media Contact: 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.
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