British luxury carmaker Aston Martin's recent financing agreement with HPS, the private credit arm of Blackstone, worth up to £550 million, has ignited a legal dispute. The deal, which uses the company's most valuable trademarks and brand rights as collateral, has removed these assets from the reach of existing creditors. This has sparked significant anger among bondholders holding £1.3 billion in debt, pushing both parties toward high-stakes litigation.
On July 22, Aston Martin announced it had secured a financing deal with HPS, with an initial borrowing of £450 million and an option to draw an additional £100 million in the future. As part of the terms, the company has transferred nearly 200 trademark assets, including the "Aston Martin" name and its winged logo, to a Cayman Islands entity called Silverco, which serves as security for the HPS loan. Furthermore, the remaining £100 million could be accessed if the company transfers a 50.1% stake in its non-automotive intellectual property to Authentic Brands.
Existing creditors, who had previously offered their own financing package that was rejected, are now fighting back. A group of bondholders, including London-based hedge funds Arini Capital Management and Tresidor Investment Management, has filed for evidence discovery in a New York court. They are seeking documents and depositions from HPS, Authentic Brands, and their advisors Moelis and Lazard, in preparation for potential legal proceedings in the UK. The creditors have labeled the deal a "value-destructive liability management exercise." One bondholder remarked that even the most aggressive private equity firms in the US would not resort to such tactics.
Aston Martin's Chief Executive, Adrian Hallmark, has defended the transaction, stating it provides the company with "additional resilience and flexibility to execute our current and future product plans." However, the deal has driven bond prices lower and pushed the company's credit rating deeper into junk territory. The financial situation continues to deteriorate. Since its listing on the London Stock Exchange in 2018, the company's market value has plummeted from over £4 billion to just £350 million, with shares falling from nearly £20 to 33 pence. Total debt now exceeds £1.5 billion.
Hampered by weak demand in China and US tariffs, the company has posted operating losses for six consecutive quarters. Even with revenue growth in the first half of this year, it burned through nearly £200 million in cash. Canadian billionaire and Executive Chairman Lawrence Stroll, who first gained partial control of the company through emergency financing in 2020, currently holds a 33% stake. Geely Group and Saudi Arabia's Public Investment Fund are also shareholders.
Independent analysts note that the move to approach HPS suggests that the current major shareholders are unwilling to inject more capital. Stroll has close ties to HPS, having secured a loan of approximately $40 million and a 19% stake in the Aston Martin F1 team in 2024 through a hybrid financing instrument from the firm. This year, the company raised £50 million by selling naming rights to the F1 team, a deal criticized by existing shareholders as undervaluing the asset. Several debt investors have said they are closely monitoring the case, believing the actions have "pushed the limits of what is acceptable." Blackstone and HPS have declined to comment.