It's been a difficult time for Aston Martin and just when things were beginning to look up, the coronavirus pandemic struck. As a brief recap, last January Canadian billionaire Lawrence Stroll's investment fund agreed to buy a 16.7 percent stake in the UK automaker for $240 million. An additional $417 million new rights issue brings the total investment to $657 million. Although this provided Aston Martin a much-needed financial lifeline, the deal also made Stroll the firm's executive chairman and almost immediately he made changes. The major push into electric vehicles was put on hold while its entry into Formula 1 was announced. Not exactly terrible news, but the coronavirus pandemic has now forced the company to seek Stroll's financial help yet again.
The consortium led by Stroll will increase its share in Aston Martin to about 25 percent following its share price taking a nosedive in recent days. "In light of recent extraordinary equity market volatility related to concerns over COVID-19, the company has renegotiated certain terms relating to the proposed investment," the company stated.
Stroll's investment fund, called Yew Tree, will also provide 75.5 million GBP ($92.6 million) for "short-term working capital support." The good news is that the Aston Martin DBX SUV has begun sales. The not so good news is that one of the DBX's biggest markets, China, is knee-deep in dealing with the COVID-19 outbreak. In other words, slower sales than expected. The North American auto market is only beginning to feel the virus' effects.
"There has been a significant change in the global market environment in which Aston Martin Lagonda operates," Stroll said. "What has not changed is our commitment to provide the Company with the necessary funding it needs to manage through this period, to reset the business and to deliver on its long-term potential."
Fortunately, Aston Martin production has not been impacted due to the supply chain from China. "Supply is secured until at least early April and the company continues to monitor its suppliers and inventory as it seeks to extend this profile to mitigate future potential disruption," Aston Martin clarified.
Hopefully, Stroll's investment will be more than enough to keep Aston Martin afloat until the market as a whole recovers from the pandemic, but this still doesn't change the fact that the DBX must be a smashing financial success. The alternative would not be good.