AML - Stock Market Listing

AML - Stock Market Listing

Author
Discussion

avinalarf

6,438 posts

143 months

Wednesday 21st August 2019
quotequote all
RobDown said:
Veg said:
Wonder how much of that £450m went on Morgan? Timing was very adjacent...
I would need to check (and I’m not in the office) as to whether it’s the same fund (Invest Industrial has several).

The £20m is genuinely not material. It would have made absolutely zero difference to investors valuations (well £20m of difference). All the valuations are done on projected profits, in the case of AML several years ahead as its in a build phase.

As Stephen says above it would be quite normal to raise money in an IPO. However, in the meeting I sat in with AP etc they were adamant they didn’t need new cash based on their projections. They still think that’s the case. But should they need to raise more money management are saying it will come from the debt markets rather than new equity (I would
Imagine the existing owners would underwrite that if need be).

One major issue here is seasonality. Aston sales are skewed towards Q4 (which the investment community hasn’t quite got its arms around yet). So the working capital requirement builds in Q2/3. That’s compounded by the cost of developing DBX at the moment.

If the cash flow picture improves in Q3 (AML has by all accounts turned down it’s production volume which will help) and the early signs of DBX order book build look good then that should naturally help. Of course if DBX looks poor all bets are off
You say that the management said they did not require new cash based on their projections.
However there is more risk of failure if a business is underfunded so I don't understand their position on this, especially as they knew their was a time lag before the DBX was produced.
If they had required and sought more new cash for it would provide for future development costs or at least a cushion until the DBX came around so why not raise it ?
Surely better to have the funds in place than have to scrabble around later when / if cash flow problems arose.
Would it have detrimentally affected the IPO share price ?
Would the big investors / management been detrimentally affected ?
Even though the big investors and management have had a very nice payday surely it's not in their interest to see the share price crash , unless their buying up the " cheap " shares .

RobDown

3,803 posts

129 months

Wednesday 21st August 2019
quotequote all
Management need to focus on running the business and worry about what the stock market does and share price second. I’ve known many a management team who has tried to do the second and it often doesn’t end well (Northern Rock, HBOS two classic cases).

Of course you can raise more equity than you need. You can gold plate the balance sheet against every contingency. But it would impact your valuation. It’s the same as building a car, you could make it 100% safe by adding every gadget, bullet proof armour etc but at the end of the day there’s a cost to that

Maybe AML management didn’t get the balance right between valuation versus downside protection? The next 6-9 months will tell who is right on that front.

But the one thing I can assure you is that the equity markets are not all seeing/all knowing, far from it. That’s half the fun. Just because investors have marked the shares down 70% doesn’t mean the current price is any more correct than it was at £19. And I certainly wouldn’t be thinking that those investors have any more of a clue about DBX etc than anyone on this forum

We live in interesting times

Jon39

Original Poster:

12,889 posts

144 months

Tuesday 27th August 2019
quotequote all

Several people on here have wondered this;

Why are Investindustrial paying £10 for shares, which at present cost £4.79?

I entered the question in to a search engine.

There is no answer.


RobDown

3,803 posts

129 months

Tuesday 27th August 2019
quotequote all
Jon39 said:

Several people on here have wondered this;

Why are Investindustrial paying £10 for shares, which at present cost £4.79?

I entered the question in to a search engine.

There is no answer.
They agreed with shareholders that they would pay £10 a share. It was a formal offer. I’ve not looked through that paperwork but I guess at no point is there a clause that says “hey if we can get it cheaper we’ll cancel the offer!” nor a clause that says “if the stock goes to £20” the committed shareholders don’t have to sell

Jon39

Original Poster:

12,889 posts

144 months

Tuesday 27th August 2019
quotequote all

RobDown said:
Jon39 said:

Several people on here have wondered this;

Why are Investindustrial paying £10 for shares, which at present cost £4.79?

I entered the question in to a search engine.

There is no answer.
They agreed with shareholders that they would pay £10 a share. It was a formal offer. I’ve not looked through that paperwork but I guess at no point is there a clause that says “hey if we can get it cheaper we’ll cancel the offer!” nor a clause that says “if the stock goes to £20” the committed shareholders don’t have to sell

Being serious Rob, might I be correct to say, that once the original proposed offer was announced to the Stock Exchange (AML trading just above £10), that there was then an obligation of some sort (SE rules perhaps) to proceed?

They presumably knew nothing about the imminent profits warning (even as an AML board director), so it was just unfortunate timing for them, that the share price declined so far below their offer price.



RobDown

3,803 posts

129 months

Tuesday 27th August 2019
quotequote all
Jon39 said:

Being serious Rob, might I be correct to say, that once the original proposed offer was announced to the Stock Exchange (AML trading just above £10), that there was then an obligation of some sort (SE rules perhaps) to proceed?

They presumably knew nothing about the imminent profits warning (even as an AML board director), so it was just unfortunate timing for them, that the share price declined so far below their offer price.
Correct I think Jon. From a corporate governance perspective I actually find it encouraging that the Invest Industrial fund didnt have any advance warning of the profit warning

Bobajobbob

1,444 posts

97 months

Tuesday 27th August 2019
quotequote all
Strange that there wasn’t a get out clause of some description. They need to get themselves a new law firm.

pschlute

719 posts

160 months

Wednesday 28th August 2019
quotequote all
Bobajobbob said:
Strange that there wasn’t a get out clause of some description. They need to get themselves a new law firm.
I am glad I do not do business with you.

Perhaps you also think that all those who bought at the IPO price of £19 should be able to forget their legal obligations too.

RobDown

3,803 posts

129 months

Wednesday 28th August 2019
quotequote all
Bobajobbob said:
Strange that there wasn’t a get out clause of some description. They need to get themselves a new law firm.
I’d picture that as having to be a two way clause though - the seller could back away if the share price suddenly moved to £15. Otherwise why commit to sell at £10 knowing the buyer can walk away if things move against him?

And at that point the contract would become meaningless unless the stock were trading in a narrow band around £10 on completion.


JB65

145 posts

73 months

Wednesday 28th August 2019
quotequote all
Will be covered through an option call or other de-risk vehicle

m33ufo

4,959 posts

232 months

Wednesday 28th August 2019
quotequote all
Has anyone here actually provisionally accepted the £10 per share purchase offer?

Jon39

Original Poster:

12,889 posts

144 months

Thursday 29th August 2019
quotequote all

JB65 said:
Will be covered through an option call or other de-risk vehicle

If so, you will be able to see the declaration, because they already hold more than 1%.







Neil1300r

5,487 posts

179 months

Wednesday 25th September 2019
quotequote all

GingerMunky

1,171 posts

258 months

Wednesday 25th September 2019
quotequote all
Neil1300r said:
Not great news and a red flag to the stock market. S&P Global Ratings downgraded Aston Martin Lagonda to 'CCC+'. Feels a little last chance saloon, success of the DBX is pretty much make or break now for AML 😞

pschlute

719 posts

160 months

Wednesday 25th September 2019
quotequote all
JB65 said:
Will be covered through an option call or other de-risk vehicle
I very much doubt it.

If as an existing shareholder you make an offer to buy a certain amount of shares at a certain price, you are doing it for a reason. To then sell call options or buy put options to limit your risk is nonsense. If they didnt want to buy more shares at £10 they would not have made they offer.
Options on a stock that had (at the time) halved in value in a short space of time are not going to be cheap.



Edited by pschlute on Wednesday 25th September 16:15

alscar

4,265 posts

214 months

Wednesday 25th September 2019
quotequote all
Not great news maybe but $250m more than they had earlier even if split rates of 12% and 15% are eye watering.
Flags already flying and DBX sales always critical.
But maybe just maybe things will be ok.

pschlute

719 posts

160 months

Wednesday 25th September 2019
quotequote all
Neil1300r said:
A sad state of affairs. Someone somewhere should have told Mr Palmer he was creating an accident waiting to happen.

Do a poll on here as to who thought about buying shares when the idea was first floated (pun intended). I imagine like everyone else, I immediately thought oh yes, where do I sign up.

Do another poll about how many did invest having seen the price and the valuation that implied for the company. Bargepole and touch come to mind.

AstonV

1,575 posts

107 months

Wednesday 25th September 2019
quotequote all
pschlute said:
A sad state of affairs. Someone somewhere should have told Mr Palmer he was creating an accident waiting to happen.

Do a poll on here as to who thought about buying shares when the idea was first floated (pun intended). I imagine like everyone else, I immediately thought oh yes, where do I sign up.

Do another poll about how many did invest having seen the price and the valuation that implied for the company. Bargepole and touch come to mind.
Palmer is a disaster and should shoulder the blame. He needs to be removed sooner that later. And take his mother and Marek Reichman with him.

RobDown

3,803 posts

129 months

Wednesday 25th September 2019
quotequote all
Look on the bright side, stock is up 16% over the last month (yes I know, it’s down quite a lot before that). AML have got the funding to finish DBX

And that product is looking like it’s shaping up quite nicely.

Still keeping everything crossed for them (and every other struggling UK motor manufacturer)

nickv8

1,355 posts

84 months

Wednesday 25th September 2019
quotequote all
AstonV said:
Palmer is a disaster and should shoulder the blame. He needs to be removed sooner that later. And take his mother and Marek Reichman with him.
Indeed- they should have installed someone with zero vision, bravery, nor indeed, hope.

Should have let AM whimper away, simply reheating the popular old Vantage for another 10+ years with only a modest facelift as it was perfect to start off with in 2005 smashbiggrin