REPORT: Aston Martin in jeopardy as parent company Investment Dar in financial turmoil
Is Aston Martin on the brink of insolvency? Britain's Guardian is reporting that the Kuwaiti fund that owns half of Aston is having trouble refinancing the debt it's incurred during the recent global economic crisis. It hasn't help that the fund failed to report its 2008 financial records on time and subsequently had trading halted on its shares. All isn't doom and gloom, however. Kuwait's Investment Dar says that it recently inked a deal that will at least buy it some time in working out a new plan to get out of its mess, but oil prices just aren't what they used to be, and money is hard to come by – even for wealth funds.
When Ford sold Aston Martin in March of 2007, times were better for the consortium that bought David Brown's legacy. Along with ex-racer Dave Richards, banker John Singers and Adeem Investment, Investment Dar bought the Bond-ride firm for $925m (£480m). Fast forward to late 2008 and Investment Dar was itself trying to borrow $1B (£630m) to refinance debt, and iteven defaulted on a $100m Islamic bond in April. So, the Dar finds itself in a position of having to keep its creditors at bay while it seeks to right the ship. The agreement they've reached now is known as a standstill agreement. That means creditors won't make any new individual claims for a while. The arrangement will continue until the end of the year and hopefully Aston Martin will survive the financial storm.
[Source: The Guardian]
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Reader Comments (Page 1 of 2)
wienekec 10:35AM (9/29/2009)
pish posh. They'll be fine.
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Adam Marcello 10:38AM (9/29/2009)
I hope so. Im not a big Aston Fan but that one-77 is just awesome.
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TonyInMI 10:46AM (9/29/2009)
I wonder what an Islamic bond is...
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TigerMil 10:59AM (9/29/2009)
Technically a follower of Islam may not charge interest on money loaned. An Islamic bond is basically a no-interest loan from one islamofascist to another.
This is probably a Sukuk.
Glock23 10:46AM (9/29/2009)
"defaulted on a $100m Islamic bond in April."
I wouldn't want to be staring down the barrel of their collection agency!
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Venom 12:50PM (9/29/2009)
Somehow I have a feeling an Islamic Bond is one of those things you might want to pay back. lol
btyler227 10:52AM (9/29/2009)
noooo! i love aston martins. they give us beautiful cars not matter which model.
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TigerMil 10:56AM (9/29/2009)
LOL. FORD should buy it back $0.30 on the dinar (that's $.10 on the dollar but you get the idea!).
Reminds me of when the Japanese bought Pebble Beach and the Japanese economy imploded.
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skablaw 11:00AM (9/29/2009)
I'm too lazy to look it up, but do brands like Aston Martin ever run in the black, or are they more or less just status holdings for whatever company happens to write the checks? I know Porsche has had periods of out-and-out profitability, but what about Lamborghini or Ferrari?
VW/Bugatti loses money on the Veyron, of course (next time someone asks, "why the hell would anyone buy a $1.2m car?" reply, "because they're getting it at a $7.7m discount"), but Aston makes real bread-and-butter supercars that aren't out in the stratosphere in terms of development costs so I'd be interested to know what kind of operating margin they work with.
It's such an interesting market to consider because we're talking about millions upon millions of dollars that go into designing, manufacturing, assembling and marketing luxury products that don't present a real value proposition to investors, and yet they soldier on despite decades of unprofitability and constant changes of management/owndership. It makes you wonder how some of these marques have even managed to hang around as long as they have.
I can see Mercedes selling a car like the SLR because it probably actually does translate to moving some AMG models, and perhaps even base SLKs. R8s sell A3s, M6s sell 335is, and LF-As, or whatever they end up being called, will no doubt sell IS350s. But did a DB9 ever sell a Focus? Has a Murcielago made anyone want to run out and get a Golf? It's a strange phenomenon that companies keep putting these cars out, but goodness knows I'm not complaining.
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Blown tranny 11:51AM (9/29/2009)
I think Aston has almost always lost money. I assume it is still in buisiness because they make beautiful cars and there is some prestige associated with owning them.
From a purely business perspective it should be euthanized.
Spectacular Bid 11:55AM (9/29/2009)
Aston Martin actually was slightly in the black at the very end of the Ford ownership however I suspect in large part because of the merchandise licensing and not so much the true automotive piece.
I was astounded when the initial bids for the company were north of $500M US let alone nearing $1B US at the time. Who in their right mind would ever have purchased a brand - even with a lovely line-up of cars and solid quality - for that much money? There is a finite number of people who can buy a $150k+ sportscar. And even the high margin revenue from tee-shirts with the AM logo and the like dries up after awhile.
Not to mention for the massive investment to buy the brand you have only about a 5-year lifespan on the basic tooling before you have to plow tens if not hundreds of millions more into revamping the lineup.
The simple days of the 1980s with Ford buying all of Aston Martin for under $40M US and churning out the same old V8 Vantage and Volante with the same old bodystyling for another decade are long gone. These owners even if the go-go days of this decade continued would've had financial issues with the nose bleed inducing purchase price.
In the words of Thomas Crown (1968) "You over paid".
JZeke 11:04AM (9/29/2009)
Mercedes Benz tie-in perhaps?
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skablaw 11:10AM (9/29/2009)
Kuwaiti Aston Martins, Indian Jaguars and Land Rovers, and Chinese Hummers... what has happened to this world?
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Rob47 11:22AM (9/29/2009)
All the emerging economies have all the money now. :(
Bob H. 11:22AM (9/29/2009)
The Golden Rule: He who has the gold rules.....that is until he doesnt have the gold anymore.
Glock23 11:42AM (9/29/2009)
With terrible trade agreements, high taxes, and the redistribution of wealth plans here in the U.S. you now can see the results.
Blown tranny 11:57AM (9/29/2009)
Glock23,
"and the redistribution of wealth plans here in the U.S. you now can see the results"
You are seeing the results of plans??? Sure, that makes sense.
The decline of US global dominance has greatly increased over the last 8 years. The last 8 months is fairly insignificant.
jsjs 4:12PM (9/29/2009)
@glock23
Uhh, the US tax rate has really never been as low for the high-income earners since 1932 or so.
During the "golden age" of American industrial might/dominance - from 1951 to 1966 or so - the tax rate for the top bracket ranged from 70% to 92% (w/ 13 of those years being at 91%).
kbm123 11:38AM (9/29/2009)
Dateline: September 29, 2009, 8:27pm in an office building somewhere in Kuwait.
Phone rings.
Secretary pics up.
Secretary: "Mr. Singers, there's a call for you from Germany. He says his name is Ferdinand Peich..."
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Rob 12:03PM (9/29/2009)
At the right price, a perfect fit for BMW.
They have one iconic British brand and this would slot in nicely
betwen BMW (the brand) and RR.
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