As we exclusively revealed in December, Canadian fashion magnate and boss of Silverstone-based Racing Point F1 Team Lawrence Stroll has taken the first steps towards acquiring a share of Aston Martin Lagonda (AML), the troubled luxury sports car manufacturer. The deal takes the form of an in initial bridging loan worth £55.5m, ultimately to be converted into an equity stake of up to 20%.
Although various outlets have alluded to a late Thursday board decision between Stroll’s group and automotive conglomerate Geely, RaceFans understands that interest from the Chinese carmaker waned earlier, and an outline agreement was reached with Stroll’s consortium on Wednesday, and Thursday was spent sorting regulatory and legal formalities.
This is borne out by AML’s statement on voting rights issued at noon yesterday, and the formal announcement at 7am Friday via the London Stock Exchange’s website. Given the legalities, such matters are not decided overnight. Indeed, Palmer would not comment on when the deal was eventually struck.
According to various insiders, AML’s situation was precarious. The company faced three choices: accept an injection of capital, draw down on a US loan facility at punitive rates, or face a severe cash-flow crunch which could have seen it unable to meet short-term obligations and potentially plunge into administration, a situation the company has regularly faced in its 113-year history.
“We would have had to take on more debt at nosebleed levels,” Palmer told Autocar, the publication with which RaceFans originally revealed Stroll’s plans to acquire an interest in AML. “$100m at 15% interest is pretty alarming, and inevitably would have created problems down the road.
“It’s not where anyone wants to go, because it is toxic debt, but I’m not going to say that we would have faced doomsday – just issues to overcome down the road. Thankfully we have a solution that I sit here now and reflect on as being enormously positive for now and the long-term.”
Palmer previously told Automotive News Europe “in the first century we went bankrupt seven times” and that “the second century is about making sure that is not the case.” Indeed, with AML being the preferred ride of fictitious super-spy James Bond, wags have suggested that 007 referred not to his code name, but to the brand’s bankruptcies.
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But why choose a consortium led by Stroll, a relatively unknown in automotive terms, over Geely, the owner of Volvo, Polestar, Lotus and London electric taxi manufacturer LEVC and thus a major automotive player?
“Lawrence and his consortium are a group of pretty big names and it is a great sign of confidence in Aston Martin and our plan that they have invested in us,” said Palmer. “They have huge experience in luxury brands and as much as anything that gives the company – and me personally – a group of mentors to work with.
“On a more personal level, Lawrence shares a lot of my beliefs and passions. He was clear that the mid-engined plans had to progress, he has a passion for F1, and F1’s ability to sell cars for you, he can see the value of the hybrid V6 and more. And he loves cars – he’s an investor who wants to engage – there would be nothing worse than a disengaged investor.”
The deal has far-reaching implications for the car manufacturer as well as various Formula 1 teams – including, of course, Racing Point – and Formula 1 itself. The announcement provides for Aston Martin to shift its title sponsorship of Red Bull to Racing Point when their current contract expires at season’s end. A name change to Aston Martin Racing or Aston Martin F1 is envisaged, having already been considered but rejected for this year.
In a subsequent media release, Red Bull stated that their current contract with Aston Martin will not be extended beyond the current term – thought to be the end of 2020 – and that the team had agreed to waive the F1 exclusivity clause. This suggests AML branding could well appear in some form on both teams this year, with title rights following in the 2021 F1 season.
This waiver is believed to have been crucial to the overall deal, for AML and the greater Red Bull motorsport operation have been partners at various levels. RaceFans has learned an agreement was struck between Red Bull Racing boss Christian Horner and Stroll during a meeting convened at Racing Point late last week.
Strikingly, in its statement Red Bull wished the employees and shareholders all the best for the future, in that order…
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Aston Martin’s logos and title rights have, though, sat awkwardly on Red Bull’s Honda-powered F1 race cars, and have their roots in Infiniti’s former sponsorship of earlier Renault-powered Red Bulls. At the time Palmer was a senior executive manager within the Renault Nissan Alliance, parent company of the Japanese luxury brand, and struck up a close relationship with Horner that has endured.
The fate of the Aston Martin Valkyrie, an AML-Red Bull hypercar project providing Le Mans levels of performance for the road and a cornerstone of the World Endurance Championship’s new premier class, has been decided. In a regulatory statement the company said the “technology partnership between Aston Martin Lagonda and Red Bull Advanced Technologies would continue until Aston Martin Valkyrie is delivered”.
The WEC programme is not thought to be under threat as the motorsport arm of Canadian automotive giant Multimatic has been confirmed as partner for the project. According to a WEC source this is unlikely to change.
However R Motorsport, which brought Aston Martin’s Vantage into the DTM in 2019, announced last week that project will not continue. The team’s top driver in the standings at the end of its first season was Daniel Juncadella in a lowly 14th.
The withdrawal of Geely from the negotiating table – although it may well return in future – opens up interesting investment opportunities for the company. Geely, said to be unhappy at being snubbed, was interested in a partnership with AML in order to showcase its electric technologies in AML’s heavily delayed range of electrified Lagonda executive supersaloons.
However, Lotus recently inked deals with Williams Advanced Engineering to co-operate on an £2m electric hypercar, codenamed Omega, and may thus use the capital saved to expand the relationship. Although a majority share of WAE was recently acquired by EMK Capital, Williams Grand Prix Holdings PLC retains a significant interest in the advanced technology company, so a far-reaching deal with the Williams F1 team cannot be excluded.
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That said, Williams is expected to continue with Mercedes power units beyond the current term which expires this year. But some form of Lotus branding on the F1 cars said to be under consideration.
Nonetheless, with Racing Point committed to using Mercedes power units and transmissions, and Mercedes parent Daimler being a 4% shareholder in AML in return for technological co-operation, parts sharing is expected to increase within both F1 operations where provided for in the regulations. Racing Point will also use some of Mercedes’ 2020 brake system components, supplied by a third party.
The statement refers to a 10-year term sheet under which the Racing Point F1 Team becomes the Aston Martin F1 works team with effect from the 2021 season, with Aston Martin Lagonda in turn receiving an economic interest in the team and a sponsorship arrangement from 2021 and for the subsequent four years, renewable for five years subject to certain conditions.
None of this, though, precludes a further merging of sorts of the two F1 operations once the dust of the latest deal has settled and the F1’s commercial and regulatory road maps are formalised – a process that seems set to drag well into the second quarter – particularly as Stroll and Mercedes F1 boss Toto Wolff have developed a close friendship.
A close associate of both recently told RaceFans, “Lawrence has replaced [the late] Niki [Lauda] as Toto’s flying companion of choice” – and an intriguing line in AML’s statement names the current consortium members, then states that it is not limited to these. In addition, to the chairman, the consortium may nominate a further director subject to certain conditions being satisfied.
The possibility of Aston Martin returning to F1 as a full constructor, following its brief flirtation with the sport six decades ago, has long been a subject of speculation. As things stand the team which entered F1 racing in Eddie Jordan’s Irish (and 7Up) colours may be about to return to similar shades, albeit in more of a British Racing Green hue.
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