Aston Martin is selling shares at a 78% discount as part of a Saudi-backed fundraising.
Shares in the luxury car marque tumbled yesterday after the company said it would sell the rights to new shares at a deep discount - part of a plan to repay expensive debts.
Aston Martin plans to raise £576million by selling new shares at 103p each, well below Friday's closing price of 484.7p per share.
The Telegraph says the discount is unusually-large for a rights issue, and the company's stock dropped more than 15% to 405p on the news.
The rights issue is part of an effort announced in July to raise £653million, which includes a first-time investment from Saudi Arabia's Public Investment Fund.
Mercedes-Benz is also backing Aston Martin in the fundraising, as is the company's largest shareholder.
Shareholders who do not participate in the rights issue face being diluted, with four new shares issued for every one in circulation.
Paying down debt
The new cash will be used to pay down some of Aston Martin's priciest debt.
Funds will also be put towards production lines for new battery-powered cars.
Aston Martin said paying down the debt and investing in electric-vehicle capacity should help it generate free cash by 2024.
The company made pre-tax losses of £285million in the first six months of this year.
The 109-year-old brand has struggled since listing on the London Stock Exchange in 2018. Repeated losses have seen its share price drop more than 90% since its debut.
The company had to be rescued by investors in 2020, an effort led by billionaire Canadian Lawrence Stroll. He took over as executive chairman and sacked chief executive Andy Palmer. Mr Palmer was replaced with Tobias Moers, who himself quit after the company lost a number of staff.
Mr Moers was replaced by Amedeo Felisa in May. Mr Felisa was chief executive of Ferrari from 2008 to 2016.
Aston Martin has been squeezed by wealthier performance brands including Ferrari and luxury marques such as Bentley and Rolls-Royce, which have the backing of the vast balance sheets of Volkswagen and BMW.
FTSE 100
The UK's top share index, the FTSE 100, was up nine points at 7,296 shortly after opening this morning, following yesterday's six-point gain.
Brent crude futures dipped 0.22% to $95.53 a barrel.
Companies reporting today
- Half-year results: Capricorn Energy
- Trading updates: Ashtead Group, Berkeley Group, DS Smith, NCC Group