Why Aston Martin Made a Risky High-Interest Bet
British luxury sports-car maker Aston Martin (LSE: AML) said that it has secured $150 million in new financing, enough to ensure that it can complete and launch an important new model.
But there's a catch: The company is paying a hefty interest rate, suggesting that its options for financing were severely limited -- and it's running out of financial breathing room.
Aston Martin said that it has priced and placed $150 million in "senior secured notes" that are due April 15, 2022. The notes -- short-term bonds that will have high priority if Aston Martin should go bankrupt -- will pay 12% interest. Half of that will be paid as "PIK" (for "payment in kind") interest, meaning that the company can service it by raising additional debt.
Source Fool.com
