Financial Times - Aston Martin, the sports car producer majority owned by Kuwait’s Investment Dar, has launched plans to sell £300m of high-yield bonds, in its maiden offering.
The issue, which will largely refinance existing bank loans, comes on the heels of a debut bond issue by Jaguar Land Rover. Last month, the rival British luxury carmaker owned by India’s Tata Motors raised £1bn in its first bond sale.
The bonds are expected to be priced after an investor roadshow in the UK and continental Europe.
As at Jaguar, the issue for Aston Martin will “clean up” its capital structure, according to a person with knowledge of the transaction, who asked not to be named.
It will also redeem preference shares and pay a £40m dividend to shareholders.
Moody’s, the rating agency, assigned Aston Martin a provisional B2 rating with a stable outlook.
The carmaker on Monday said it had sold 4,184 cars in 2010, up from 4,000 in 2009, thanks to a broader product offering, including its Rapide four-door sports saloon.
According to accounts filed with Companies House, the carmaker reported a pre-tax profit of £6.9m last year, roughly unchanged from 2009, and revenues of £474.3m, up 36 per cent.
Aston Martin said it had a “clear strategy to deliver future growth built around product innovation and development, deepening penetration in existing markets and expanding into new markets”.
But the group faces challenges as it seeks to broaden its vehicle range and invest more in emission-cutting technologies to compete against bigger competitors such as Porsche.
Investment Dar led a consortium that bought Aston Martin from Ford Motor in 2007 in a deal worth £493m, before the financial crisis decimated luxury car sales and stretched the Kuwaiti group’s finances.
Investment Dar in February agreed a restructuring deal on its $3.7bn debt.
Aston Martin’s bond issue highlights a growing trend of smaller, private companies tapping bond markets for the first time, as an alternative to bank loans.
The bonds will have a seven-year maturity and be secured on company assets.
While the Jaguar sterling bonds are yielding about 8 per cent, Aston Martin is expected to have to pay a small premium to that because of its higher leverage and smaller size, according to the person briefed on the issue.
Deutsche Bank, Credit Suisse and UBS are running the bond sale.
