Aston Martin ratings cut as Covid-19 increases pressure
Aston Martin Lagonda Global Holdings Plc
151.60p
16:30 19/04/24
Beleaguered luxury car maker Aston Martin Lagonda (AML) had its credit ratings lowered as the coronavirus pandemic piled on more pressure for the cash-hungry business.
Cboe UK 250
16,792.60
17:05 19/04/24
Cboe UK 250 NTR
24,339.84
17:05 19/04/24
Cboe UK 350
13,880.95
17:05 19/04/24
Cboe UK 350 NTR
22,368.30
17:05 19/04/24
Cboe UK All Companies
13,767.27
17:05 19/04/24
Cboe UK All Companies NTR
22,827.20
17:05 19/04/24
Cboe UK Consumer Cyclicals Sector
11,363.07
17:05 19/04/24
Cboe UK Consumer Cyclicals Sector NTR
16,847.26
17:05 19/04/24
Standard & Poors lowered its issuer and issue ratings on the company to CCC- from CCC+ and placed all its ratings on CreditWatch with negative implications.
AML plans to raise £536m via a £171m share placement and £365m rights issue to bolster its weak liquidity position and reset its business strategy. Demand in its core Chinese market had already slowed due to the trade war with the US.
“Weaker-than-expected results and continued high cash burn have left AML needing a rescue deal to survive its current liquidity crunch. Over the past 12 months, AML has experienced weaker-than-expected conditions in some of its core end-markets and declining core sports car sales volumes, as well as depressed profitability and weak cash flows,” S&P said.
“We also note that since first announcing the transaction, AML's share price has weakened significantly due to the effect that Covid-19 uncertainty is having on the global financial markets, leading to the consortium to renegotiate the terms of the planned placement and rights issue.”
“In our view, if markets were to continue to deteriorate and AML cannot successfully complete its planned placement and rights issue, then it will face a liquidity crisis that would likely lead to a restructuring.”
The ratings agency said that even with new money and production of the DBX model coming online, market headwinds including the impact of Covid-19 would likely result in further pressure on AML's financial results and liquidity.