Aston Martin Says It May Leave Its Bank Covenants
A recent article on Times online brings to general attention the fact that the luxury car maker could breach its banking covenants this year. Now that Aston Martin has erased 600 jobs from their human resources list and postponed production due to the unsold stock, David Richards, the motor sport entrepreneur who is chairman of the luxury car marque, admitted the turmoil could lead to a technical breach of its banking covenants later this year. In addition, Richards confessed the group had already delayed any spending on product development by six months.
Back in 2007, Ford sold the luxury company to a Kuwaiti-backed investment consortium for £479 million, but it seems that with the current financial crisis, Aston's backers might need more cash. Before Christmas, Investment Dar’s executive vice-president, Amr Abou El-Seoud, said it was considering offers to sell up to 20% of Aston Martin.
Moreover, investment Dar, one of Aston’s Kuwaiti backers, has recently reported it needed loans of up to $1 billion (£680m) to refinance its own short-term debts. It is believed that Credit Suisse is going to advise the luxury car maker on a strategic asset review.
So it's something we didn't actually get it. The gloomy picture includes layoffs, stopped production, badly needed loans and Aston Martin boasts about not facing “immediate problems”? How come the company is better placed than its rivals? Apparently, Aston Martin is not quite up-to-date with what "extreme measures during crisis time" means...