PE-backed Aston Martin used as collateral for owner's debt restructuring

Ellie Pullen
27 June 2013

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British car-maker Aston Martin, which is part-owned by private equity firm Investindustrial, has been used as collateral by its majority backer, The Investment Dar (TID) in a fresh debt restructuring plan with creditors.

In an on-going ordeal that has spanned more than four years, Kuwaiti investment firm TID has received backing from a portion of its debt providers. The agreement means that the involved creditors will receive a 50% haircut on the money owed to them.

According to the Financial Times, TID will begin a phase of asset disposal in 2017 under the new plan in a bid to repay its debts.

Credit providers of TID, who have not taken part in the settlement-in-kind offer, will retain the claims agreed upon in a previous $3.7bn debt restructuring arrangement, which took place in 2011.

Aston Martin, which is part-owned by Italian GP Investindustrial, was acquired by TID in 2007 alongside Adeem Investments and a number of US and UK investors, according to the firm's website. The consortium bought Aston Martin from Ford Motor Company for approximately £500m, 60% of which was provided as equity.

TID acquired approximately 50% of Aston Martin through the buyout. In December last year, Investindustrial acquired a 37.5% stake in the business for €190m.

Investindustrial has previous experience in the sector, having sold its portfolio company Ducati Motor Holding, an Italian motorcycle manufacturer, to Audi for €900m. The firm reaped a 3x money multiple on its original investment from the sale, according to unquote" data.

TID's acquisition of Aston Martin in 2007 included a £225m sum provided by the London branch of German bank WestLB (now known as Portigon Financial Services) through a murabahah facility. Rather than being a loan given on interest, the Islamic murabahah practice is a fiduciary sale in which the bank must take possession of an asset before 'selling' it to the buyer in the form of its monetary value, with an added fixed margin that represents the time value of money due to the buyer not actually paying cash for the asset at the time of purchase.

TID reportedly ran up its substantial debt due to a series of loans secured by the firm in a five-year period prior to the 2008 financial crisis. The loans were used to buy companies and real estate for TID's portfolio, which alongside Aston Martin includes the real estate of Grosvenor House Apartments, situated on Park Lane in London.

Aston Martin, a luxury car manufacturer, was founded in London in 1913. The company is now headquartered in Gaydon, Warwickshire, and recorded an EBITDA of £69.3m for 2012, as well as a 20% year-over-year increase in revenue in Q4 2012. Aston Martin's enterprise value sits at around €940m. The company's CEO is Ulrich Bez.