Aston Martin lenders threaten legal action over £550m HPS deal

Lenders to Aston Martin Lagonda have threatened the carmaker with legal action if a deal to sell part of its branding and naming rights goes ahead, challenging the £550 million debt financing agreed last month with HPS, a private credit provider owned by BlackRock.

A group of creditors owed £1.3 billion by the FTSE 250 group has argued that the deal breaches key terms of Aston Martin’s existing debt by putting some assets beyond their reach.

In a letter to the company, the bondholders warned that they may be forced to take legal action that 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 declined to comment.

The company said in its announcement of the financing that “the new financing is secured against certain of the group’s assets situated in a newly incorporated subsidiary, together with certain other assets of the group”, but declined to clarify further which assets had been put outside the bondholders’ reach.

On an earnings call last week, Doug Lafferty, chief financial officer of Aston Martin, said the financing deal was “important for the company as a whole”.

The company is backed by the Canadian billionaire Lawrence Stroll, Saudi Arabia’s Public Investment Fund and the Chinese carmaker Geely, and has been forced to repeatedly raise money as it fights to stem years of losses. Aston Martin, which is majority-owned by Stroll, sold the permanent naming rights to its Formula One team earlier this year, raising £50 million.

In February it warned that it would cut as many as 600 jobs, or 20 per cent of its workforce in Warwickshire and South Wales, part of a target to cut costs by about £40 million, most of which would be stripped out this year. In November, more than 100 roles at its St Athan plant in the Vale of Glamorgan were placed at risk.

Last year losses climbed to £363 million, from £289 million in 2024, as revenue declined by 21 per cent to £1.25 billion on the back of a 10 per cent fall in sales volumes. The company had earlier limited exports to the United States while it assessed the effect of US import tariffs on demand.

Over the first six months of this year, revenue improved by 38 per cent to £629 million, but pre-tax losses climbed further to £154 million, from £141 million, exacerbated by higher financing costs. The debt financing deal boosted pro-forma liquidity to £340 million from £145 million, the company said.

Net debt, which has been periodically lowered by the company’s frequent cash calls and refinancing, rose again, to £1.54 billion at the end of June.

The shares, which have fallen 50 per cent over the past 12 months, closed down half a penny, or 1.4 per cent, at 34½p.