A group of bondholders have warned Aston Martin they may begin legal proceedings over its £550m financing arrangement with HPS Investment Partners, the Financial Times (FT) reported.
The British carmaker confirmed last month that it had agreed the funding package with BlackRock-owned private credit firm HPS.
The deal includes a £450m term loan and a separate £100m facility available for later drawdown.
The financing has been challenged by a group of existing creditors owed £1.3bn ($1.74bn), who say the structure places assets beyond their reach and breaches conditions linked to Aston Martin’s current debt.
According to the report, the bondholders have sent a “letter before action” to Aston Martin’s board, warning that legal proceedings may follow.
They are seeking to unwind the HPS arrangement and block the transfer of certain intellectual property.
Aston Martin has not set out the detailed terms of its agreement with HPS, leaving creditors without full visibility over the transaction.
However, they have determined that part of the arrangement depends on Aston Martin transferring a 50.1% stake in its non-automotive intellectual property to US brand management firm Authentic Brands.
HPS has a stake in Authentic Brands, and the extra £100m facility depends on the branding transfer being completed.
The existing lenders had already objected to the financing, saying it removes assets from the collateral pool supporting their claims in favour of the new lender, and that they were not offered the opportunity to provide the funding themselves.
They contend that both the financing structure and the intellectual property transfer would reduce the value of their collateral and breach the terms of their lending agreement.
Aston Martin, cited in the report, has said the HPS financing was “secured against certain of the group's assets situated in a newly incorporated subsidiary, together with certain other assets”, but it has not specified to bondholders which assets have been moved beyond their claims.
The FT reported that chief financial officer Doug Lafferty described the arrangement as “important for the company as a whole”.
Earlier this year, Aston Martin raised £50m through the sale of naming rights for the Formula 1 team racing under its brand.
The purchaser, AMR GP Holdings, the F1 team’s holding company, effectively passed through funds from Lawrence Stroll, who indirectly controls AMR.
In the first half of the year, Aston Martin reported just over £19m in “net marketing expense” related to sponsorship, representing the cost of paying AMR to keep using the Aston Martin name after that sale.
Just Auto has approached Aston Martin for comment.
