Aston Martin creditors threaten legal action over offshore debt deal

Aston Martin, the British luxury carmaker famed for its association with James Bond, is facing a new crisis as its bondholders threaten legal action over a controversial debt restructuring deal. The company, which has struggled financially for years, recently entered into a complex agreement with HPS, the private credit arm of fund giant BlackRock, to ease its debt burden. As part of this deal, Aston Martin shifted valuable naming and branding rights from the UK to the Cayman Islands, a move that has enraged its existing creditors.

The creditors, who lent money to Aston Martin against these assets, were blindsided by the deal. They claim that the company deliberately moved assets out of their reach, making it harder for them to recover their loans if the company defaults. The creditors have sent a 'letter before action' to the Aston Martin board, warning that they may file legal proceedings to unwind the HPS deal. They argue that the deal is illegal and that the board ignored their offer of cheaper funding while accelerating the HPS tie-up.

The dispute is the latest chapter in Aston Martin's troubled history as a publicly listed company. The firm has been burning cash for years, and its share price has plummeted, wiping out private shareholders. The company's executive chairman, Lawrence Stroll, a Canadian billionaire who rescued Aston Martin six years ago with a £500 million investment, has been a central figure in the company's strategy. Stroll, who also owns a Formula 1 team, has used the racing outfit to promote the brand, but the hoped-for 'halo effect' has not materialized as the team languishes near the bottom of the F1 constructors' table.

In February, Aston Martin raised £50 million by selling its F1 naming rights to Stroll 'in perpetuity', another cash injection from the mogul. The latest HPS deal includes a £450 million loan and an additional £100 million if the company hands a 50.1% stake in the transferred trademarks to Authentic Brands, which owns brands like Reebok and Ted Baker. The creditors, who set a deadline of last Friday, are seeking compensation or a reversal of the deal. Unless the row is resolved, the bondholders may take legal action, adding to the company's woes.