Aston Martin launches £530m bond to support new car
Discussion
Article for those of you with an FT subscription:
https://www.ft.com/content/d2af8334-12f7-11e7-80f4...
In short, they are refinancing the existing bonds with cheaper (though still 7%) bonds.
The company is still in loss but S&P look at R&D expenses as capital investment rather than operating costs. S&P Global therefore forecasts an end to ebitda losses in 2018, and Aston Martin to generate positive cash flow the following year.
S&P has reaffirmed a B minus credit rating on both the company and the new notes, with the comment that “progress gives us more confidence in the viability of the business over the medium term”.
https://www.ft.com/content/d2af8334-12f7-11e7-80f4...
In short, they are refinancing the existing bonds with cheaper (though still 7%) bonds.
The company is still in loss but S&P look at R&D expenses as capital investment rather than operating costs. S&P Global therefore forecasts an end to ebitda losses in 2018, and Aston Martin to generate positive cash flow the following year.
S&P has reaffirmed a B minus credit rating on both the company and the new notes, with the comment that “progress gives us more confidence in the viability of the business over the medium term”.
Thanks for posting
The key thing I guess is that they're replacing two very expensive bonds (one at 10.25%) with a cheaper (but still expensive) new one. So its a step forward for the income statement
The other point for those without an FT subscription is that AML are saying they've already sold 2/3rds of this years DB11 production
I guess with one of the two lines solely dedicated to the DB11, they can produce, what, 2000-2500 of them a year (depending on shifts)? So they've probably sold/got orders for 1200-1500 DB11s already in 2017? Just back of the envelope.
The key thing I guess is that they're replacing two very expensive bonds (one at 10.25%) with a cheaper (but still expensive) new one. So its a step forward for the income statement
The other point for those without an FT subscription is that AML are saying they've already sold 2/3rds of this years DB11 production
I guess with one of the two lines solely dedicated to the DB11, they can produce, what, 2000-2500 of them a year (depending on shifts)? So they've probably sold/got orders for 1200-1500 DB11s already in 2017? Just back of the envelope.
AstonZagato said:
...S&P Global therefore forecasts an end to ebitda losses in 2018, and Aston Martin to generate positive cash flow the following year. ....
Do they/can they say any further out than that?Someone posted a chart to show the shape of sales curves after the intro of new models. Positives to 2018/19 should be obvious. It's 2020 on that will be telling.
RobDown said:
The key thing I guess is that they're replacing two very expensive bonds (one at 10.25%) with a cheaper (but still expensive) new one. So its a step forward for the income statement.
Good to hear the DB11 orders are strong. Having previously thought new ones were only available after a long wait, I was confused by the recent comments on here, about the number of used examples being for sale at well below list.
I don't have my notes to hand, but do the existing bonds only require interest to be paid at maturity, and not regularly throughout the term? If so, does that mean that both the previous debt and outstanding interest is all being refinanced by new debt? My financial worry side thinks, snowball.
Pension etc. regulators now insist on more bonds being held (for safety not best returns). I have only made money with bond purchases on a few rare occasions, when I thought base rates would fall. Of course at present, one might possibly have the opposite view, so to the AML bond buyers, the best of luck.
Jon39 said:
I don't have my notes to hand, but do the existing bonds only require interest to be paid at maturity, and not regularly throughout the term? If so, does that mean that both the previous debt and outstanding interest is all being refinanced by new debt? My financial worry side thinks, snowball.
The 10.25% ones were only "pay in kind" (PIK) so they pay their interest semi annually by giving the investor more of the same bonds. There were $165mio issued initially but there are now $219mio outstanding.The Sterling bonds paid their 9.25% semi-annually, so there are still £304mio outstanding.
AstonZagato said:
The 10.25% ones were only "pay in kind" (PIK) so they pay their interest semi annually by giving the investor more of the same bonds. There were $165mio issued initially but there are now $219mio outstanding.
The Sterling bonds paid their 9.25% semi-annually, so there are still £304mio outstanding.
The Sterling bonds paid their 9.25% semi-annually, so there are still £304mio outstanding.
Thank you Mr. Zagato. May we call you Aston? -
Therefore, if I understand the PIKs correctly, every 6 months the issue of additional new bonds, instead of cash interest payments, means the new bonds also become entitled to future interest (in the form of PIK). That would of course make the quoted 10.25% even higher, for the overall debt transaction.
I invest in businesses where sometimes borrowings are in the £ billions. However, when they also have profits in the £ billions, I don't need to worry. Gearing can obviously be a good way to magnify profits, but it works best and creates so much more confidence, when the debtor does not even need to borrow.
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