AMR GP Finance - a new issue

Maybe another excuse to watch Formula 1 highlights - just to check that the team is still in business.


7th October 2021


AMR GP Finance PLC


PUBLICATION OF PROSPECTUS AND LAUNCH OF FIVE YEAR 7.00% STERLING RETAIL ELIGIBLE BOND GUARANTEED BY AMR GP LIMITED (RNS here)


AMR GP Finance PLC (the “Company”), a wholly owned subsidiary of AMR GP Limited (“AMR”), the company which operates and manages the Aston Martin Cognizant Formula One™ Team, announces the proposed issue of sterling-denominated 7.00% Fixed Rate Notes due 2026 (the “Bonds”), guaranteed by AMR, pursuant to a prospectus dated 7 October 2021 (the “Prospectus”). The Bonds are available to retail investors in the United Kingdom, the Isle of Man, Jersey and the Bailiwick of Guernsey and are being issued by the Company (among other things) to finance the development, construction, operation and maintenance of AMR’s wind tunnel and new factory, as more particularly described in the Prospectus.

The Bonds will bear interest at a fixed rate of 7.00% per annum, payable semi-annually in arrear, and will be redeemed (subject to and in accordance with the terms and conditions set out in the Prospectus) at their nominal value on the maturity date which is expected to fall on 8 November 2026.


The Bonds have a minimum initial subscription amount of £1,000 and are available in multiples of £100 thereafter.


The offer period is now open and is expected to close at 12 noon (London time) on 1 November 2021. The Company and AMR retain the right to close the offer early, in conjunction with the Lead Manager. The Bonds are expected to be issued on 8 November 2021.


The Bonds are expected to be listed on the Financial Conduct Authority's Official List and admitted to trading on the London Stock Exchange's regulated market and through the electronic Order Book for Retail Bonds (ORB) segment. Holders of Bonds should, in most normal circumstances, be able to sell their holdings during normal trading hours (subject to market conditions) on the open market through their stockbroker.


The Prospectus and information booklet is available for viewing at: https://www.astonmartinf1.com/investor-relations.

A copy of the Prospectus for the Bonds has been submitted to the National Storage Mechanism and will shortly be available for inspection at: MailScanner has detected a possible fraud attempt from "gbr01.safelinks.protection.outlook.com" claiming to be https://data.fca.org.uk/#/nsm/nationalstoragemechanism.













Peel Hunt LLP is authorised and regulated by the FCA





For important disclosures relating to the communication, please see Disclosures



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Comments

  • Thanks very much for this! I like the shortish term of the bond, but 7% seems quite high. Is there something they're not telling us? :-)
  • That's one way of putting it. I've been round and round this in my head after reading the prospetus and I find it difficult to summarise my view.

    I'm a pretty cautious investor. My sweet spot is generally yields between 4.25%-5.5% depeding on what is it and the duration at the moment, so readers might want to bear that in mind about my view.

    I don't mind a bit of a punt with small amounts from time to time. I need despite my cautious nature a bit of excitement in my life.

    So, what of this 7% Aston Martin GP wind tunnel investment? Well, I am sitting on a pile of cash right now with no home so any new investment is a welcome opportunity.

    As far as I can work out realistically the security would be a windtunnel. I suspect they are not worth that much second hand in a fire sale and further it seems the security is likely not to cover all the bond as £15m is being used to repay a Barclays loan, although if someone wants to read the prospectus more throughly than me I'm happy to be corrected.

    They are losing significant money as is the parent guarantor.

    It seems to come down to Lance Stroll, apparently a billionaire and whether the bond would continue to get paid if things got tough financially. And that I cannot work out. He for example bought Racing Point which is now AM F1 out of receviership/administration about 3 years ago. I know other F1 teams have struggled financially and been through similar.


    I'm not sure what to do as I write this. I will consider over the weekend but it looks a bit too binary for me. Either the coupon gets paid (and um the bond rolled in 5 years) or if a default very little return. If the coupon were 10% I'm probably be applying. 7% looks too low to me but then we are back to I think returns on 99% of every bond I look at is too low.



  • The comment in the last full paragraph of Laughton's post is not a good omen:

    MailScanner has detected a possible fraud attempt
  • I suspect that the hunger for anything at all on the ORB will see this supported. When was the last time we had an offering? II are offering it but haven't as yet e-mailed to say that they are. Hopefully when it has gone on to the market they will continue to offer it on-line and not just add it to their 'telephone only' bonds or am I just a hopeless optimist?
    I'll go for it, and watch formula 1 and keep my fingers crossed.
  • I would happily lend money to Mr Stroll at 7%.

    Aston Martin have issues, but seem to be well supported by banks and creditors.

  • Interactive Investor have been offering this since end of last week

    We are about to move from them to HL - but despite an email from my wife and a telephone call from me we have no further news about whether or not they are going to offer it .

  • edited October 12
    You have now run into the biggest problem with HL. They very rarely offer any of the new bonds and I've always managed to get what I wanted through AJ Bell rather than contacting HL so it's never bothered me to date.

    And the book runner on this issue doesn't appear to have helped the issue in this case as the way I read it AML aren't offering the broker a fee for doing the bond offer. I haven't much experience but I think it's usual or "good form" to give the brokers half a percent (or maybe more).

    You have prompted me to make a decision on what I want to do here. I'm still undecided.
  • The Lead Manager will receive fees of 1.5 per cent. of the principal amount of the Bonds
    issued. In addition, certain authorised distributors may be eligible to receive a fee as follows: each Authorised
    Offeror may be eligible to receive a distribution fee of 0.375 per cent. of the principal amount of the Bonds
    allotted to and paid for by it.
  • JammyDodger - thanks for that - everything was looking quite good until a couple of days ago re transferring to HL (well back to them after a few years)

    Then a couple of minor irritations about trading in a coupleof lines which ironically I have been successful with (sort of) with ii and now, perhaps much more of an irritation, is the new bond IPOs you mention above.

    When we left HL before it was more to do with going down to one broker (Selftrade in those days) to keep things a bit more simple as we get further into retirement - but now I'm wondering whether we should revert to having two again
  • Actually I'm surprised given AJR's post that HL aren't offering them. Whether they are authorised or not I'm sure they could put some deal together. Sometimes the lead manager waits to see what the interest is and then opens it up to additional parties.

    I'd follow it up myself with HL Woz but I'm very undecided whether to go for it or not. I'm a huge F1 fan and owning a few would be a bit of fun but on the other hand investing is about making money and when I look at for example IPF2 which is paying around 6.25%, I don't like the look of the coupon at 7%. Only I can't buy any more IPF2 as I've got enough of that one. In fact, anything I do like I've got enough of and yet still I am sitting on far more cash than I would like.

    HL will be happy enough to offer it in the secondary market but I suspect it will open above par.
  • You would think HL would offer it given the below from the press release:

    Peel Hunt LLP is acting as Lead Manager in relation to the offering.
    The initial authorised offerors are:
    • AJ Bell Youinvest
    • Equiniti Financial Services Limited
    • Hargreaves Lansdown Asset Management Limited
    • Interactive Investor Services Limited
    • Redmayne Bentley LLP
  • There's a write up in shares magazine. Part extract

    Investors tempted by the generous coupon on the AMR GP Finance bond should note the phrase ‘fool’s yield’. Coined by bond hedge fund manager Dan Rasmussen, it refers to the fact that higher yielding bonds have historically given investors poorer returns than lower yielding, but better-quality bonds. That’s because poorer quality bonds are more likely to default than higher quality, and lower yielding investment grade bonds. While the high yield on the AMR GP Finance bond suggests that some caution should be exercised, the F1 team owner appears to be seeing some momentum and was trading close to EBITDA (earnings before interest, tax, depreciation, and amortisation) break-even in the six months to 30 June.
  • also available via iDealing - in fact it was they that first alerted me to the issue by emailing me the press release I pasted at the top of this thread.
  • I have applied for double the number I would ordinarily go for. Here is my reasoning:

    There is a ton of cash sloshing about with few good homes to go to.
    ORB offers are currently almost as rare as hens’ teeth.
    Demand should, then, be high.
    Thus I expect that, at least in the short term, trading will be well above par.
    This means that if I feel over exposed I can sell half my bonds at a profit and hold the rest.

    Roger.
  • Interactive Investor sent me an email tonight offering this IPO
  • Yes - ii seem to be on the ball on this one at least. It appeared at end of last week on their website. Nothing so far from HL so last night we put an order in with ii.

    Would much preferred it to be with HL, as we plan to move to them soon

    Maybe they think with a Nov 1st closing date they have loads of time to set the offer up. If so, just hoping they aren't too late and the offer closes by the time they get their act together.
  • I have decided to go for this as and when HL pull their finger out.

    Only a small position for me. 0.3% of my portfolio.
  • edited October 14
    I've got fed up of waiting for HL to launch this bond. I think they've had long enough and I've sent them a message through the platform.
  • OK - at long last they are now offering it.

    I phoned Monday and my wife emailed about same time (which they didn't reply to - yet !)
  • edited October 15
    Wonderful. Application done. Nice to have a new offering. Let's hope this is the start of a trend.
  • Also put some in today - will be very interesting to see if it does close early .
  • My first considerations on this bond was to ignore it as being too risky.

    However, I then thought that there will likely be a huge demand for it, and that I would buy a chunk with a virtual certainty of selling in the coming weeks/months, having earned a bit of interest on the way and making a small gain.

    However, I also think there is a slight risk that these might not trade above par for very long, making the whole exercise rather pointless and needing a careful eye on the price in the meantime.

    7% doesn't seem like a high enough return, especially with RPI inflation heading towards 5%

    Chances are I will cancel this order over the weekend
  • I think the question we have to ask is what's the risk? Not much on that Citywire BB gives much indication that posters have read the prospectus.

    I think it's very likely this is being offered to retail because retail will enable a lower coupon on the bond. As I've said before I perceive something higher, say 9% as being more reasonable.

    For me, the question is around faith that Laurence Stroll, a billionaire will support the interest payments even if things don't go well in the F1 team. I think it unlikely he would jeopardise his relationship with the City by not paying on this bond even if the F1 team can't fund it

    The first two interest payments go into escrow which helps. My gut says the bond will be just fine for the first 3 years, but it's hard to have any opinion past that point. A bond to keep an eye on rather than just stick in a drawer and forget about. There again, it's paying 7% so it's going to carry some risk.
  • Aston Martin institutional corporate bonds yield about the same and have been doing well despite recent restructuring turmoil.

  • Is there any indication as to the size of the issue?
  • In a word, no.

    Furthermore their grammar is terrible. They write “amount” rather than “number”.

    “Amount of Bonds to be issued: The total amount of the bonds to be issued will depend on the demand received before the End of the Offer Date.”

    Roger.
  • Almost makes it sound as though he's personally guaranteeing this issue:-

    https://www.telegraph.co.uk/business/2021/10/20/aston-martin-boss-defends-200m-cash-call-new-formula-1-hq/

    I also see that this is the first bond issue to be made available on Primary Bid:-

  • Guy Butler Desknote: https://www.guybutler.co.uk/wp-content/uploads/2021/10/2021-10-20-AMR-GP-Finance-Desknote-final.pdf

    "Guy Butler is an independent institutional credit specialist based in The City of London, the company can trace its roots back over 50 years and today is known globally as a specialist bond house."
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