AML - Stock Market Listing

[LTP]

Minglar said:

It wasn’t me Jon. I posted the RNS which was issued the morning the H1 results were released on 29th July. Looking back through this thread I think the link may have been posted by Peavey123 on 6th August, page 182. Hope that helps.

Best Regards

Minglar

Tried that one - it just leads to a form on what looks like the AML site for you to fill in your and your company details

[Jon39]

LTP said:

Tried that one - it just leads to a form on what looks like the AML site for you to fill in your and your company details

https://edge.media-server.com/mmc/p/8sqgxcvi

It does still work.
When I clicked the link just now, I went straight through to the croaky tones of LS (who presumably refused to phone in sick), probably because on the day,, I had already filled in the registration form.

Try putting some details on the form now and you may then get through to the Q&A.

Worth a listen. I am sure LS became carried away and said too much about the future refreshed models.

[GreasyHands]

Minglar said:

LTP

Totally agree with you. The level of debt that has been taken on since LS got involved is quite astonishing, and the top priority has to be to get it off the balance sheet as soon as possible.

I guess the fact that AML debt and cash flow problems predates Stroll is irrelevant to you. Stroll took on a troubled company and then needed to both clear out the channel stuffing problem left behind by AP and simultaneously was faced with the Covid issue with a company in a weakened state.

Maybe he should have just liquidated the company, and put zero into CAPEX and paid off bond holders.

Edited by GreasyHands on Sunday 21st August 01:01

[Minglar]

GreasyHands said:

Minglar said:

LTP

Totally agree with you. The level of debt that has been taken on since LS got involved is quite astonishing, and the top priority has to be to get it off the balance sheet as soon as possible.

I guess the fact that AML debt and cash flow problems predates Stroll is irrelevant to you. Stroll took on a troubled company and then needed to both clear out the channel stuffing problem left behind by AP and simultaneously was faced with the Covid issue with a company in a weakened state.

Maybe he should have just liquidated the company, and put zero into CAPEX and paid off bond holders.

Edited by GreasyHands on Sunday 21st August 01:01

No it’s not irrelevant to me. I didn’t say that. I’m fully aware of the situation before Stroll took over. I would agree that if he hadn’t stepped in when he did AM would probably have folded in late 2019 or early 2020. But you cannot argue that debt levels now are much higher since he took control, and cash reserves are still being consumed at an alarming rate. It’s fair to say that the borrowings have been used for R&D and some very good new products, but some of this is at extortionate rates, and is therefore expensive to service. The economic climate now is very different to three years ago, and that is something that is completely beyond the control of LS. To me that creates a big hurdle. So in your own words, if the debt isn’t dealt with, or the economic/interest rate outlook doesn’t improve, I think there is a strong possibility that…..

“Maybe he should have just liquidated the company, and put zero into CAPEX and paid off bond holders.”

And if that happens he will probably stick to his little F1 project, and emerge relatively unscathed.

I hope I’m wrong. I don’t want AM to fold, but I don’t see how they can continue to operate as they currently are in the longer term, without huge investment. The recent injection will not be enough imho.

Best Regards

Minglar

[Minglar]

https://www.londonstockexchange.com/news-article/A...

Best Regards

Minglar

[Jon39]

I am confident that Aston Martin will be able to continue.
Widespread passion for the brand has always been their strength (and 'get out of jail' card).

As described in my topic https://www.pistonheads.com/gassing/topic.asp?h=0&... ,
they have survived every past crisis, so I expect that to continue.

Remarkable how that has happened for such a very long time, with an almost continually loss making company.

The figures are much bigger now than before, but to be able to raise significant equity now and also manage to have the rights issue guaranteed (probably high fees), must be considered quite an achievement. Many of the shareholders will have lost a considerable amount of money and will soon suffer dilution, but they are being invited to hand over more cash (we would say, for a very good cause).

The bond/debt refinancing in a couple of years time will be a severe test, because presumably interest rates at the time might be much higher than last time (the rate agreed then was many multiples of base rate). Wonder if replacing the bonds with equity might be a possibility, therefore removing servicing costs?

[Minglar]

I hope you all have a little bit of spare time on your hands. A long but interesting read.

https://amsc-prod-cd.azureedge.net/-/media/corpora...

Best Regards

Minglar

[Jon39]

The number of shares and price of the Rights Issue, is not going to be announced until about the 5th September.
We can therefore only calculate the effect of the Placing at present.

Share price now = 464p

Add the cash raised in the Placing £78m (before fees) to the current market value, gives a theoretical new market value of £618m.
Total shares in issue mmediately following the Placing = 139.75 m.

Existing shareholders will therefore see their investment diluted by about 5%.
Current 464p share price, becomes theoretical 442p.

[Minglar]

Jon39 said:

The number of shares and price of the Rights Issue, is not going to be announced until about the 5th September.
We can therefore only calculate the effect of the Placing at present.

Share price now = 464p

Add the cash raised in the Placing £78m (before fees) to the current market value, gives a theoretical new market value of £618m.
Total shares in issue mmediately following the Placing = 139.75 m.

Existing shareholders will therefore see their investment diluted by about 5%.
Current 464p share price, becomes theoretical 442p.

I think the document stated a placing dilution of 16.7% Jon, (page 12, number 2). That is based purely on the number of shares in circulation now, compared to the number that will be in circulation after the PIF placing. It’s not monetised as no one knows where the SP will be in two weeks time, and therefore the future market cap. My guess would be below your 442p level but who knows. If you read it all the way through it also states that AM can issue up to 5.75 Bio new shares on the back of the RI, irrespective of the price that the new RI shares will be issued at. I think I read that correctly, and quite frankly it is staggering.

Best Regards

Minglar

[Jon39]

16.7% dilution !

I don't know where my calculation went wrong. Much worse than I thought then.

Any long-standing AML shareholders will by now, be so accustomed to having their shirts repeatedly ripped off, they probably won't worry about another 17% being lost.

After all that, will they really willingly participating in the rights issue ?

[Minglar]

Jon39 said:

16.7% dilution !

I don't know where my calculation went wrong. Much worse than I thought then.

Any long-standing AML shareholders will by now, be so accustomed to having their shirts repeatedly ripped off, they probably won't worry about another 17% being lost.

After all that, will they really willingly participating in the rights issue ?

I know I have been very grumpy on here of late and apologies to everyone for that, but the cynic in me would suggest this is being engineered to eradicate many of the small retail shareholders. Imho LS has no interest in taking them along for the ride, if indeed it does eventually work out well of course. I wouldn’t be surprised if there is a stock split at some stage after the RI, similar to the 1/20 split in December 2020. The number of shares in circulation would therefore drop dramatically (after the post RI flood) and many smaller investors would have their holding wiped out. We shall see I guess.

Best Regards

Minglar

[cardigankid]

Jon39 said:

Do you think incompetents, might perhaps be considered a touch harsh ?
I always keep in mind that for 109 years, hardly any annual periods have ever been profitable and cash has repeatedly run out.
During thise years, there have been a number of very skilled people running the business and even they could not make AM financially successful.

It's a fair point. AML was left in a good position by Ford. In retrospect, what the IPO did was to extract that value from AML, leaving it with a mountain of debt. That was not Lawrence Stroll's fault. The company is still operating, which is a simple fact, with technical support from Mercedes Benz, a key factor IMHO, and with a great range of products.

It appears that it may not be a happy ship, with departures of key staff members one would have preferred to see stay. Precipitate announcements are made and timescales drift. It appears that the company is being funded partly by suppliers and partly by customer deposits. We have costly squabbles with key partners, specifically St.Gallen, which seems both distasteful and dangerous. None of that may be incompetent, but it certainly doesn't look clever.

However, and I am still at a loss to understand how this is even legal, the company's assets are used to benefit the CEO personally. The CEO recognises the brand value of AML. Very good. But is that then exploited to the benefit of the company, for example by reducing the level of debt, without which, given the continuing involvement of Mercedes Benz, AML might actually be successful? No, it would appear (and maybe I am wrong) that it is being exploited by the CEO for his personal gain and the benefit of his son. That is not incompetence, but may be something of a rather nastier description. Then the board of directors allow this to continue. That is where a question of incompetence might be raised, in my view anyway.

[Peavey123]

16.6% is only the PIF part of the deal, raising c.£75m.
The next part is the raising of c.£575m.
So you can imagine what type of discount that will entail.

Minglar, why would smaller equity holders get wiped out with a stock split?
Even on the last split, 1 for 20, you only lost out if you had less than £20 invested.

Slicing the pie into smaller chunks makes no real difference. Stroll did that so the media couldn't say it was £19 at IPO and now it's down at 23p.
But that's what it is.
And about to get a whole lot worse.

[Minglar]

Peavey123 said:

16.6% is only the PIF part of the deal, raising c.£75m.
The next part is the raising of c.£575m.
So you can imagine what type of discount that will entail.

Minglar, why would smaller equity holders get wiped out with a stock split?
Even on the last split, 1 for 20, you only lost out if you had less than £20 invested.

Slicing the pie into smaller chunks makes no real difference. Stroll did that so the media couldn't say it was £19 at IPO and now it's down at 23p.
But that's what it is.
And about to get a whole lot worse.

I am fairly sure that with the 1/20 in December 2020 you were wiped out if you had less than 20 shares ie you didn’t qualify for 1 whole “new share”. That holding could have cost a fair bit more than £20 if you had bought them early after the IPO and had done nothing else. If AM do another stock split, it would all depend on the ratio of the split, and I guess that ratio would be dependent on how many shares are in the system at the time. That could potentially turn some of the smaller holdings in to nothing, and as you said, if AM did do that, once again the share price would look much healthier purely in numerical terms, as it did before. All speculation on my part though. Let’s wait and see how it plays out over the next five or six weeks and how the market reacts. I would assume it’s going to trade quite a lot lower between now and the end of September. Time will tell.

Best Regards

Minglar

[Peavey123]

The share price at the split was around 75p, so 20 shares cost you £15.

[Jon39]

Minglar said:

I am fairly sure that with the 1/20 in December 2020 you were wiped out if you had less than 20 shares ie you didn’t qualify for 1 whole “new share”. That holding could have cost a fair bit more than £20 if you had bought them early after the IPO and had done nothing else. ...

... I would assume it’s going to trade quite a lot lower between now and the end of September. Time will tell.

19 shares bought in the IPO would have cost £361.
Being wiped out in the Consolidation (holding fewer than 20 shares, not £20) would not matter much, because by then they were nearly worthless anyway

Sometimes registrars of various companies write to holders who have a smaller number of shares, offering a sales facility.
A large number of small shareholders, are an administrative burden for the registrars, who I presume charge their client companies according to the amount of work involved.

Imagine if AML traded near 335p before we get to the rights announcement. PIF would want a revised price.

[Minglar]

Peavey123 said:

The share price at the split was around 75p, so 20 shares cost you £15.

Not really. That’s how much they were worth at the time of the split, not necessarily what you had paid for them. But as Jon said the numbers involved in that scenario are scratch really. If the number of “new shares” after this up coming RI does increase dramatically then any future split could have a much higher ratio than 1/20. As I said though, all speculation on my part.

Best Regards

Minglar

[Jon39]

During 35 years of investing, I have never had holdings in any businesses, which have done a reverse share split.

When companies do well, they occasionally do a share split to reduce the share price (not increase it).
It was once popular on the London market, to prefer share prices to be under 1000p, but in recent years, that preference seems to have ended. There are now many FTSE 100 companies with share prices well over £10 and a few over £100, with no sign of wanting share splits.

Doing one reverse share split is therefore probably a bad sign, two might be broadcasting failure.

[nite_narc]

LTP said:

As an aside, because of my fleeting increased interest in this thread I went to find a recording of the AML presentation so I could put some of the comments ITT into context, but couldn't find one. I did manage to find a transcription that "MoneyController.UK" have posted that might be of interest.

Summary here: https://www.moneycontroller.co.uk/finance-news/ast...

Full transcript .pdf here: https://docs.publicnow.com/viewDoc?hash_primary=48...

The transcript does not have a timestamp so it's difficult to relate it directly to some of the "key moments" other posters ITT have referred to

Positive to see so much reference to EV and BEV in particular. The increased partnership with M-B to accelerate the adoption of these platforms is promising and the target of a 2025 release for the company's first BEV is excellent.

While the term 'ultra-luxury' is grating the tactical application of a built-to-order system (more akin to Rolex and Ferarri) is also excellent to hear. Dealer stock was a massive issue that AP had to combat, but it wasn't a new one under his reign. Too much dealer stock results in discounting and lowering value in the second-hand market, devaluing the brand. I know we all want a bargain AM but in reality, that's a terrible thing for existing and aspiring owners.

Glad they're nixing the LWB DBX and the PHEV can't come soon enough.

Could anyone else stop themselves from reading Amadeo's bit with a strong Italian accent?

[oilit]

Jon39 said:

During 35 years of investing, I have never had holdings in any businesses, which have done a reverse share split.

When companies do well, they occasionally do a share split to reduce the share price (not increase it).
It was once popular on the London market, to prefer share prices to be under 1000p, but in recent years, that preference seems to have ended. There are now many FTSE 100 companies with share prices well over £10 and a few over £100, with no sign of wanting share splits.

Doing one reverse share split is therefore probably a bad sign, two might be broadcasting failure.

GE was the first one I saw do it