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Why Aston Martin Made a Risky High-Interest Bet

TheMotleyFool

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Why Aston Martin Made a Risky High-Interest BetPhoto, wide shot, wide-angle lens, Fashion store, Midday, harsh overhead sunlight, directional sunlightt, photo by Ansel Adams: https://img.theapi.app/temp/4103ce22-87d6-4bef-ba44-0baf5ab280bb.png

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

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