Lawrence Stroll led Aston Martin shares have slumped down 16% as the British company find itself in $1.2 billion in debt.
Lawrence Stroll owned, Aston Martin shares have slumped again and by nearly 16% this time. The news comes after the British company revealed it would give a discount on a rights issue worth $662 million in order to reduce its debt pile.
On Monday, Aston Martin revealed investors would be able to buy more stakes at $118/share as it is offering a 78% discount to the $550/share price closed down on Friday. This saw the slump in the shares by 16% as the market closed on Monday.
The rights issue first came to light in July when there was a $747 million fundraising from Saudi Arabia’s Public Investment Fund(PIF). PIF would become the second largest shareholder of Aston Martin.
The Canadian billionaire led the 2020 bailout for the car maker. Despite the fund being led by Saudi Crown Prince, Mohammed Bin Salman, hugely criticised for crimes against humanity, Stroll made it clear that he is unconcerned over PIF investing in Aston Martin.
Ever since Stroll’s bailout, the British Carmaker has started its own Formula 1 team. The Silverstone-based F1 team has performed poorly in the years of its existence which would not have helped its stock prices.
Aston Martin’s value has reduced by four-fifths over the past year
Since its first appearance on the London Stock Exchange in 2018 at $21, Aston Martin has experienced stifling time under three different CEOs.
High listing costs led to the company requiring an early bailout in 2020. Unfortunately, that bailout came at the time of the Covid-19 pandemic causing a major hit to its operations.
Aston Martin shares plunged 64.2 per cent yesterday and by 7.44 percent so far today. That cannot be healthy for any company.
— Joe Saward (@joesaward) September 13, 2022
The borrowing the British luxury car brand did during the bailout snowballed into a colossal debt burden and associated interest costs. Forbes reported that Aston Martin has a debt of $1.2 billion costing $154 million in interest per year.
Due to this, the company’s shares have dipped almost four-fifths of their value over the past year.
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