Aston Martin - comment
The Senior Secured Notes are down c.25pts, which appears to be an over-reaction. Stepping back, our model, and those of others, already pointed to a £300-400m funding gap over the next 18 months. That gap has now been addressed. The market reaction reflects two negatives: the capital has been raised as debt rather than equity (from a potential strategic investor), and the financing has been provided externally to the existing Senior Secured Noteholders, resulting in an effective priming of the Noteholders.
The price move is only justified if liquidation has become the most likely outcome, but our initial view is different. The funding requirement was well understood and should already have been reflected in valuations. The priming transaction is undoubtedly credit negative, particularly as it has been executed outside the existing pari passu creditor group, but at c.55 cents the bonds are now pricing in a significant deterioration in recovery prospects. We are revisiting our recovery analysis, but that is not our starting assumption.
A key outstanding question is the collateral package. We had been comfortable that substantially all of the group's key operating assets formed part of the shared collateral securing the Senior Secured Notes, RCF and related bank facilities. The new financing is instead secured against assets transferred into a newly incorporated subsidiary, raising the question of which assets have been moved. Market rumours suggest the Gaydon manufacturing facility forms part of the new collateral package, although this appears difficult to reconcile with the existing Senior Secured Notes documentation, under which AML explicitly grants security over Gaydon under English law.
The headline announcement is a new £450m facility, although c.£190m is used to repay and cancel the existing RCF and Yew Tree Consortium facility. On our numbers, the transaction therefore provides c.£250m of incremental liquidity, alongside a potential £100m delayed draw term loan and a further possible £100m junior facility.
The company also disclosed pro forma liquidity of c.£340m as at 30 June 2026, implying approximately £40m of negative free cash flow during Q2. We are revisiting our model and assumptions on cash flow generation in light of this print and whether taking a position would be appropriate.
Attention now turns to the H1 results on 29 July, where the key focus will be liquidity, cash flow and further disclosure on the collateral package. We also expect the rating agencies to review the Senior Secured Notes following their effective subordination.