My Column

Bond Baddie for Aston Martin Debt.

  • Date: Monday 7th October 2019
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James Bond and Aston Martin can only be described as another iconic duo.

007 has had a long relationship with the luxury car company, and it was announced in June that £1.5million Valhalla will be Bond’s choice of car in the next film, No Time To Die.

But behind the scenes, there have been a few bumps in the road for Aston Martin and the most recent bond to be linked with the company has left investors shaken, not stirred.

If you thought Goldfinger was a particularly nasty Bond baddie, this one could be even more dangerous and could even spell the end for Aston Martin.

Its name? Bond…PIK bond. The difference is, this bond is a financial instrument that could decide the future of this much-loved UK brand.

Let me just say, I adore Aston Martins. I fell in love with the brand and the car in 2002 when I saw Pierce Brosnan cutting around in one in Die Another Day.

I love them so much that since then I’ve owned 17 DB9s, 2 DBS, 2 Vanquishes and a Vanquish S prior to my current car, a DBS Superleggera.

And you might remember that one of the reasons I was asked to be a Dragon was because of my expertise in buying and selling underperforming companies.

And I think we can all agree Aston Martin is certainly underperforming.

Since its initial public offering in October 2018, Aston Martin Lagonda has seen its share price plummet.

From a high of £19.15, they slumped to £3.71 and have only recovered slightly to £4.85 on Friday.

So where does that Bond baddie fit into this? No, not Le Chiffre, the PIK bond. Well, Aston Martin Lagonda borrowed $150million at the hugely expensive rate of 12 per cent, With the option to  add another $100 million of borrowing to tide the company over as it launches the DBX.

This second lot will carry a 15 per cent interest rate and is conditional on the firm selling 1,400 models of the DBX. Both are due in 2022.

There are two things that jump out at me from this company’s car crash finances.

Check out that interest rate! It’s higher than the speedometer when Bond races through the Highlands in Skyfall in a vintage DB5.

The other thing is the interest isn’t being made on a regular basis. Part of the debt is structured as a payment-in-kind note (PIK), which means the interest is not paid regularly but rolled up and paid at maturity.

Overall, payments at the end of the term are higher. Why? Can Aston Martin not afford regular payments? And why do they need the money? Well, they’ve borrowed via a bond to fund the DBX launch.

Panmure Gordon investment analyst Sanjay Jha fears that Aston Martin might have to price the DBX – its first sports utility vehicle – at a discount to be able to raise the money via the bond sale which tied to a target.

Imagine that. It’s almost unthinkable that an iconic, luxury brand like Aston Martin would cut prices to get the required number of sales but car launches are fickle and going into the SUV market is a gamble.

However the new DBX could be a turning point – with all the capabilities of an SUV but it will drive flawlessly like a sports car.

Priced between £150-£160k, the car will have an incredible 4.0 litre twin-turbo V8 engine producing 550 bhp – to say I am excited is an understatement.

With production starting in early 2020, it won’t be long before the new DBX is up for grabs.

Only time will tell if buyers say Dr No to the new DBX. Is Aston Martin going to Live Or Let Die?

Or perhaps this gamble will pay off and we’ll see that this is No Time To Die for our favourite luxury car-maker.

I’m keeping my fingers crossed that Aston Martin is back in the fast lane soon.

Related Content Video: Will the DBX SUV save Aston Martin from Bond?

Side 

I have been delighted to see a wave of initiatives designed to help business talent and our younger generations flourish.

The British Business Bank’s Start Up Loans programme has revealed it has lent more than £30m to small businesses in Scotland since it was launched in 2012.

In total, the scheme has issued more than 4,000 loans, with an average loan size of £7,462, to help people in Scotland become their own boss.

Through a network of delivery partners, the scheme also provides pre-application support with business plans and cash flow forecasts and free mentoring to help businesses get into the best possible position to succeed.

It can be scary to take the first step to becoming an entrepreneur, so I’m glad there are initiatives like this that offer support as well as funding.

Start Up Loans has also reported an increase in entrepreneurship in Scotland since March, dishing out £3.5million in loans in the past six months. This just shows what a difference schemes like this can make.

Meanwhile, the Digital Xtra Fund (DXF) announced it has £75,000 of funding available for digital skills projects across Scotland under a scheme aimed at inspiring young people to understand, create and use technology.

In particular, the scheme hopes to help youngsters in more rural parts of the country as it says they are particularly vulnerable to missing out on learning vital computing skills.

To date, the fund has reached nearly 30,000 young people through grants totalling £550,000 since it launched in 2016.

The business world only continues to become more and more technology focused so I really hope this new pot of funding helps as many of our youngsters who could use some extra support as possible.

Related Content Video: My Journey As An Entrepreneur - How I Started

 

Laugh

Archaeologists have revealed the remains of two 18th century buildings within Loch Lomond and Trossachs National Park are likely an illicit whisky distillery.

Legal 18th century whisky was often of a poor quality, due to the high taxes imposed on malted grain which saw some distilleries use unmalted raw grain instead.

As illicit distilleries paid no tax, they used good malted grain and their whisky was smuggled to markets where it would fetch a higher price than licensed distilleries.

The canny distillery owners placed their buildings in a fairly inaccessible area close to Glasgow and in close proximity to water in a bid to outsmart the excise men.

I wonder if they knew then just how important whisky exports would become to Scotland’s economy!

Related Content Video: Make More Money - How to Charge More

Weep

Scottish founded fashion retailer, Ted Baker, has reported £23million in losses for the past six months to 11 August.

As a result, shares in the company fell by 29 per cent.

The company’s executives blamed heavy discounting across the high street, consumer uncertainty and a poorly received spring/summer collection.

The company was founded by Ray Kelvin who opened his first store in Glasgow in 1988. The chain went from strength to strength and just two years later, it had opened stores in London as well as in several other key cities.

Just one year ago, Ted Baker reported a £24.5million pre-tax profit. I really hope the retailer can turn things around and not end up being the latest iconic store to disappear from our high streets.

Related Content Video: How to Sell Your Business

 

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