Aston Martin confirm equity injection talks

Aston Martin has confirmed it is currently under offer for a stake in the famous motoring brand and it is thought that a deal could be made within the next week, if not the next few days.

Current owners, Kuwaiti finance firm Investment DAR Co, are looking to sell part of Aston Martin Lagonda and last week had reportedly agreed to sell a minority stake to an Italian buyout firm for £250 million. However, a higher bidder has come in this week from Indian tractor company Mahindra & Mahindra Ltd.

A document was issued to bond holders on Thursday and explained the situation: “Aston Martin, with the support of its shareholders, confirms that discussions are at an advanced stage to secure a capital increase which will ensure it can deliver its medium and long-term growth plans.”

DAR paid £479 million for Aston Martin back in 2007 from the Ford Motor Company. According to one investor dealing with Aston Martin’s debt, the investment firm needs to retain at least 50 per cent of ownership to ensure that a change-of-control covenant isn’t activated on £300 million of high-yield bonds.

A second investor involved with their debt claims that the deal with Mahindra is for 40 per cent of the luxury car company’s equity and voting rights and currently values the firm at £750 million. However, the original bid from the Italian buyout firm comes with a technical partnership with Mercedes and AMG and will have DAR giving both deals as much consideration as the other.

Both bids are currently being scrutinized by the Aston Martin board and Mahindra are hoping for a swift conclusion, with sources close to the deal commenting that they want the deal finalised “by the end of the week”.

DAR has denied that they are looking to sell off Aston Martin fully, but the Kuwaiti firm have struggled under the debt load used to fund its acquisitions. It was reported that in February 2011, lenders agreed to take a 10 per cent stake in DAR in exchange for an initial $70 million equity injection and the full repayment of its $3.7 billion debt inside the next decade.