A group of lenders to Aston Martin Lagonda is threatening the carmaker with legal action over a deal to sell part of its branding and naming rights, challenging a £550 million debt financing agreed last month.
The creditors, owed £1.3 billion by the FTSE 250 group, argue that the deal breaches key terms of Aston Martin's existing debt, putting some assets beyond their reach.
In a letter to the company, the bondholders warned that they may be forced to take legal action, which would unwind the financing deal with HPS and block the sale of certain intellectual property assets.
The financing comprises a £450 million term loan and a £100 million facility that can be drawn in future. Under the terms of the transaction, Aston Martin would transfer 50.1 per cent of its non-automotive intellectual property to Authentic Brands, an American brand developer.
HPS is an investor in Authentic Brands, and Aston Martin's ability to access the £100 million from the private credit provider is dependent on the branding rights deal taking place.
Aston Martin has declined to comment on the issue, citing a company announcement that stated the new financing is secured against certain of the group's assets, but did not specify which assets had been put outside the bondholders' reach.
The company has been struggling to stem years of losses, with net debt rising to £1.54 billion at the end of June. It has repeatedly raised money to stay afloat, including selling the permanent naming rights to its Formula One team earlier this year.
Aston Martin has also cut costs by reducing its workforce and limiting exports to the United States while it assessed the effect of US import tariffs on demand.
Despite improving revenue in the first six months of this year, the company reported pre-tax losses of £154 million, exacerbated by higher financing costs.
The debt financing deal boosted pro-forma liquidity to £340 million, but the company's shares have fallen 50 per cent over the past 12 months, closing down half a penny at 34½p.
