AML - Stock Market Listing
Discussion
Jon39 said:
KevinBird said:
Read in Evening Standard: https://stocks.apple.com/AeDhYWoxCR8GxY3CDn3RUIw
Thank you for posting, Kevin.
Extract.
'The loss-making British luxury car-maker is seeking to refinance at a tumultuous time in debt markets following the surge in interest rates and uncertainty around rate cuts. Talks are set to focus on a $1.1 billion bond that’s maturing in November next year, with 10.5% coupon puts the company on the hook for payments of $120 million annually.'
We have speculated on here previously, that such negotiations could be tense. At least action is being taken early, as was the case latest time, therefore involving an additional early repayment fee.
When the 10.5% bonds were agreed last time, prevailing interest rates were negligible. Some blue chip firms were then issuing 30 and 40 year bonds, at not much over over 3%. The economics are certainly very different now, so what interest rate will be demanded by the lenders, and how will a loss making business be able to afford it ?
Strange about the promise of a part repayment to be in November 2023. The capital raise was connected with that statement. I have not read about any repayment having been made.
Mr. Stroll does seem to have some helpful friends though.
“Lawrence intends to be here for many, many years,” Stroll said.
SSO said:
This is my favorite line in the article:
“Lawrence intends to be here for many, many years,” Stroll said.
“Lawrence intends to be here for many, many years,” Stroll said.
Yes, that was hilarious.
He morfed himself into a third party!
My interpretation about wishing to remain Chairman (possibly also CEO, in everything but name) for as long as possible, is needing the relationship between AML and his private F1 team to continue (as agreed to 2050).
The free rights to use of the Aston Martin name, is clearly important to attracting and keeping the big F1 team sponsors. Some new sponsors have even mentioned their delight, to have the opportunity to partner with Aston Martin.
Imagine circumstances arising where the naming rights suddenly ended.
Stroll F1 would then be like Hass F1, when it comes to seeking sponsors. We all remember the Rich Energy embarrassment. Lengthy publicity for a stalled start-up business, but it was reported that HASS F1 never received payment.
Sorry I've been following this thread on and off so am not up to date. When the first set of bonds were issued, they had an interest rate of something like 12.5% or so if I remember correctly. I was thinking, wow, as long as the company lasts eight years then at least you've got your money back.
Have those bond yields been paid such that it must be about eight years by now so those bond holders must be on a winner unless it has already been redeemed or returned/converted or whatever?
BTW: Jon39, thank you for starting this thread and keeping it up. Also thank you for quoting details when others put a link up because some of them are within paywalls and half the time I can't be bothered to click on the links anyway.
Have those bond yields been paid such that it must be about eight years by now so those bond holders must be on a winner unless it has already been redeemed or returned/converted or whatever?
BTW: Jon39, thank you for starting this thread and keeping it up. Also thank you for quoting details when others put a link up because some of them are within paywalls and half the time I can't be bothered to click on the links anyway.
SSO said:
This is my favorite line in the article:
“Lawrence intends to be here for many, many years,” Stroll said.
I was assuming that was a misquote, but no...“Lawrence intends to be here for many, many years,” Stroll said.
https://www.bloomberg.com/news/videos/2024-02-12/a...
6:45 in...
He doesn't look, or sound, terribly happy about things, despite what he's saying.
leef44 said:
Sorry I've been following this thread on and off so am not up to date. When the first set of bonds were issued, they had an interest rate of something like 12.5% or so if I remember correctly. I was thinking, wow, as long as the company lasts eight years then at least you've got your money back.
Have those bond yields been paid such that it must be about eight years by now so those bond holders must be on a winner unless it has already been redeemed or returned/converted or whatever?
BTW: Jon39, thank you for starting this thread and keeping it up. Also thank you for quoting details when others put a link up because some of them are within paywalls and half the time I can't be bothered to click on the links anyway.
Have those bond yields been paid such that it must be about eight years by now so those bond holders must be on a winner unless it has already been redeemed or returned/converted or whatever?
BTW: Jon39, thank you for starting this thread and keeping it up. Also thank you for quoting details when others put a link up because some of them are within paywalls and half the time I can't be bothered to click on the links anyway.
Thank you for you kind words Frank.
Whilst on the subject of paywalls, try www.archive.ph
It works with some paywalls, Telegraph, Financial Times, etc., but not everything.
The AML bonds that were running 8 years ago, have since been been refinanced. That happened about a year before the maturity dates.
The current bonds have a relatively short lifespan. They are denominated in US$, presumably at the insistence of the lenders. One of the bonds has deferred interest, to be paid at maturity.
It appears that AML have again begun refinancing negotiations early. With double figure interest rates last time, I shudder at what they might be next time, now bank base rates are much higher.
The big thing always in Aston Martin's favour, is the very valuable brand, but unfortunately that does not help pay business costs . For 110 years, making pre-tax profits has never been an essential. They now like to talk about EBITDA, as if that were a substitute for profit. Expect you know about Mr. Charlie Munger's opinion is of EBITDA.
The bonds are secured, but of course repayment does depend on successful refinancing.
Edited by Jon39 on Wednesday 14th February 19:01
I definitely would not have been able to stomach the risk on those bonds but what a result for those who did.
There is always that risk of an AM administration then a buy out. The brand just has that desirability.
The DB9 has always been one of my favourite cars and I still have a desire to own one even reading this forum of all its faults. But then I was a TVR owner so it says more about the petrol in my veins rather than my common sense.
There is always that risk of an AM administration then a buy out. The brand just has that desirability.
The DB9 has always been one of my favourite cars and I still have a desire to own one even reading this forum of all its faults. But then I was a TVR owner so it says more about the petrol in my veins rather than my common sense.
leef44 said:
The DB9 has always been one of my favourite cars and I still have a desire to own one even reading this forum of all its faults. But then I was a TVR owner so it says more about the petrol in my veins rather than my common sense.
Don't forget a V8 Vantage of the same age. The 4.7 is a good model.
It might look smaller than a DB9, but that is deceiving.
Plenty of cabin space and more luggage capacity than a DB9.
Only 2 seats though, but the DB9 rear seats are hardly suitable for adults to travel very far.
Wonderful end of era sports cars.
Naturally aspirated V8.
Manual gearchanges available.
'Old school' exhaust systems.
Jon39 said:
leef44 said:
The DB9 has always been one of my favourite cars and I still have a desire to own one even reading this forum of all its faults. But then I was a TVR owner so it says more about the petrol in my veins rather than my common sense.
Don't forget a V8 Vantage of the same age. The 4.7 is a good model.
It might look smaller than a DB9, but that is deceiving.
Plenty of cabin space and more luggage capacity than a DB9.
Only 2 seats though, but the DB9 rear seats are hardly suitable for adults to travel very far.
Wonderful end of era sports cars.
Naturally aspirated V8.
Manual gearchanges available.
'Old school' exhaust systems.
leef44 said:
Sorry I've been following this thread on and off so am not up to date. When the first set of bonds were issued, they had an interest rate of something like 12.5% or so if I remember correctly. I was thinking, wow, as long as the company lasts eight years then at least you've got your money back.
Have those bond yields been paid such that it must be about eight years by now so those bond holders must be on a winner unless it has already been redeemed or returned/converted or whatever?
BTW: Jon39, thank you for starting this thread and keeping it up. Also thank you for quoting details when others put a link up because some of them are within paywalls and half the time I can't be bothered to click on the links anyway.
“On a winner” isn’t quite as straight forward as it might appear just by looking at the rate. Have those bond yields been paid such that it must be about eight years by now so those bond holders must be on a winner unless it has already been redeemed or returned/converted or whatever?
BTW: Jon39, thank you for starting this thread and keeping it up. Also thank you for quoting details when others put a link up because some of them are within paywalls and half the time I can't be bothered to click on the links anyway.
The way that risk weighting approaches work for/in various financial institutions can mean that exposure to higher risk investments (which AM was at the time and still probably is) can prevent them from doing a greater volume of less risky business.
Also worth bearing in mind that not all investors would take that debt and carry it all “naked”. People offsetting with CDS or similar may still have yielded a return but at a cost.
That said, AM wasn’t exactly inundated wanting to offer them money so the spreads will have been quite wide for whoever did fund them.
When you look at corporate debt, especially sub-investment grade, worth being aware that there are often costs other than the interest element, so be wary if AM announce any new debt that seems materially cheaper.
LooneyTunes said:
“On a winner” isn’t quite as straight forward as it might appear just by looking at the rate.
The way that risk weighting approaches work for/in various financial institutions can mean that exposure to higher risk investments (which AM was at the time and still probably is) can prevent them from doing a greater volume of less risky business.
Also worth bearing in mind that not all investors would take that debt and carry it all “naked”. People offsetting with CDS or similar may still have yielded a return but at a cost.
That said, AM wasn’t exactly inundated wanting to offer them money so the spreads will have been quite wide for whoever did fund them.
When you look at corporate debt, especially sub-investment grade, worth being aware that there are often costs other than the interest element, so be wary if AM announce any new debt that seems materially cheaper.
The way that risk weighting approaches work for/in various financial institutions can mean that exposure to higher risk investments (which AM was at the time and still probably is) can prevent them from doing a greater volume of less risky business.
Also worth bearing in mind that not all investors would take that debt and carry it all “naked”. People offsetting with CDS or similar may still have yielded a return but at a cost.
That said, AM wasn’t exactly inundated wanting to offer them money so the spreads will have been quite wide for whoever did fund them.
When you look at corporate debt, especially sub-investment grade, worth being aware that there are often costs other than the interest element, so be wary if AM announce any new debt that seems materially cheaper.
Interesting, LT.
You clearly have a detailed knowledge, of this particular sphere of finance.
I have had thoughts that AML to continue as a 'going concern', must be very dependent on being able to continually refinance it's enormous debt (in relation to their business size).
Economic conditions and prevailing interest rates have changed considerably since their last debt refinancing, so how do you see the next refinancing going?
Profitability and Aston Martin have always been worlds apart, so lenders must presumably study their financial history.
Carrying debt began following the sale by Ford, but that debt size has increased considerably in more recent years.
Wonderful cars, but alway dodgy financials.
LooneyTunes said:
“On a winner” isn’t quite as straight forward as it might appear just by looking at the rate.
The way that risk weighting approaches work for/in various financial institutions can mean that exposure to higher risk investments (which AM was at the time and still probably is) can prevent them from doing a greater volume of less risky business.
Also worth bearing in mind that not all investors would take that debt and carry it all “naked”. People offsetting with CDS or similar may still have yielded a return but at a cost.
That said, AM wasn’t exactly inundated wanting to offer them money so the spreads will have been quite wide for whoever did fund them.
When you look at corporate debt, especially sub-investment grade, worth being aware that there are often costs other than the interest element, so be wary if AM announce any new debt that seems materially cheaper.
The way that risk weighting approaches work for/in various financial institutions can mean that exposure to higher risk investments (which AM was at the time and still probably is) can prevent them from doing a greater volume of less risky business.
Also worth bearing in mind that not all investors would take that debt and carry it all “naked”. People offsetting with CDS or similar may still have yielded a return but at a cost.
That said, AM wasn’t exactly inundated wanting to offer them money so the spreads will have been quite wide for whoever did fund them.
When you look at corporate debt, especially sub-investment grade, worth being aware that there are often costs other than the interest element, so be wary if AM announce any new debt that seems materially cheaper.
Agreed. What I meant by "on a winner" was that they managed to come out the other end and didn't lose all their capital having gained the high returns.But yes, the risks felt too high for me against those returns. It was something I considered at the time but at that time there was a high risk of default so I wasn't implying it was a generous return by any means.
AstonZagato said:
I'd argue that their product line up is now as strong as it's been in the last decade.
The debt is really the issue though (and the guffology marketing).
The debt is really the issue though (and the guffology marketing).
Yes, core products now have the essential Aston Martin desirability again.
Short-term traders (gamblers) study price movements, buy shares and then just hope that the next person will pay more.
Investors (longer-term) are more interested in the financial fundamentals of a business.
They are putting money out today, with an expectation of getting more money back in the future, through a capital value increase and/or dividends.
AML at present has a market value of £1.3 billion, so a buyer (individual investors being part buyers) would be buying at a price of £1.3 billion, plus the debt of about £1 billion.
What return would you expect to receive over the next 5 or 10 years, on a £2 billion investment?
Many businesses are able to 'throw off cash', but Aston Martin is continually having to ask shareholders for more capital, just to remain in business.
Realisation by investors (downward share price) appears now to outweigh the demand for the shares by short-term traders.
Also into the share price mix, would be wondering whether Geely or PIF, might mount a takeover bid.
Last year, short-termers were encouraged to buy shares, after seeing Fernando Alonso standing on the podium.
Investors want to see 'queues outside the doors of Aston Martn dealers', before becoming excited, because they know there is more involved in creating after-tax profits, than a sponsored team winning races.
SSO said:
There also a rather large payables number (roughly GBP 700 mil-800 mil) plus another several hundred million in customer deposits to add to the pile.
They have been raising capital almost in an annual basis, seemingly without difficulty.
Do you forsee that being able to continue, or will shareholders and bond buyers eventually say, no thank you?
Wonder if the 2023 results can be 'sweetened' slightly, to help lubricate another capital raise offer, on results announcement day?
I can remember the good news of the refreshed Mercedes technical agreement being announced, immediately prior to a capital raise.
Another 1 for 20 would be a fun game to play. A great way to 'increase' the share price.
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