Aston Martin agreed to give up majority control of its non-automotive branding rights as part of a financing arrangement providing the automaker with £550 million ($740 million) in debt funding. The transaction has drawn objections from a group of bondholders, who are threatening legal action after details of the agreement emerged.
The financing was arranged last month through HPS, a credit firm owned by BlackRock. Under terms described by unnamed sources, Aston Martin is required to transfer 50.1 percent of its non-automotive intellectual property to Authentic Brands, a US-based sports, media, entertainment and lifestyle platform. The transfer would leave Aston Martin with a minority interest in that part of its brand rights.
The package includes a £450 million ($605 million) secured term loan. Aston Martin could also receive a further £100 million ($134 million) through a delayed draw term loan, but access to that amount is conditional on completion of the branding-rights transaction. Few details about this condition were disclosed when the HPS financing was initially announced.
The assets covered by the transaction concern use of the Aston Martin name outside the company’s automotive operations. According to the report, the sale of a majority interest in those rights formed part of the funding arrangement agreed with HPS. Sources identified Authentic Brands as the other party to the branding agreement.
A group of Aston Martin bondholders sent a letter to the company’s board of directors over the weekend, according to the Financial Times. The creditors warned that they may pursue legal action, arguing that the new financing moved assets outside the collateral pool supporting their existing loans.
The bondholders also said they were not given an opportunity to offer new financing to Aston Martin. They believe the HPS agreement breaches the terms of their lending arrangements because assets connected to the Aston Martin brand were transferred as part of the new financing structure. The report does not identify the bondholders or describe any legal case that has already been filed.
Aston Martin declined to comment on the prospect of legal action from the creditors. After the HPS financing was announced, the company’s chief financial officer described the arrangement as important for the company as a whole. No additional response to the specific claims made by the bondholders was included in the source report.
The latest arrangement follows another transaction involving the Aston Martin name. Earlier this year, the company raised £50 million ($67 million) by selling rights to use its name to the Aston Martin Formula 1 team. The HPS-linked agreement separately involves a 50.1 percent interest in Aston Martin’s non-automotive intellectual property.
Completion of the branding-rights deal is the next stated condition in the financing process. Aston Martin must finalize the transaction before it can access the conditional £100 million delayed draw term loan. Meanwhile, the bondholders’ threatened legal action remains unresolved, and the company has not commented on whether the dispute will proceed.
