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Aston Martin in peril as owner Investment Dar runs out of cash

28-Sep-2009 • Bond Style

Kuwaiti sovereign wealth fund, The Investment Dar that owns half of Aston Martin admits it is struggling to re-finance its debt - reports the Guardian.

Fears for the future of Britain's Aston Martin car brand were heightened after the Kuwaiti sovereign wealth fund that owns half of the luxury carmaker admitted it was struggling to refinance its debt.

Kuwait's Investment Dar said it signed an agreement with creditors and investors to freeze claims and give more time to thrash out a deal.

The Investment Dar is one of several Kuwaiti banks and investment houses to run into trouble as the global economic meltdown hammered the tiny oil-rich Gulf state. The value of overseas investments has also declined in the downturn, leaving many investment funds nursing large paper losses.

A recovery in the oil price in recent months has so far failed to alleviate the situation, according to local observers.

Aston Martin was sold by Ford in March 2007 at the height of the economic boom. A consortium led by former racing driver Dave Richards, investment banker John Singers, Investment Dar and Adeem Investment acquired the sports car manufacturer made famous by the James Bond films.

The deal was then valued at $925m (£480m) and the Dar's 51% share was partly financed by several international banks which had agreed to a $393m sharia-compliant loan.

At the time the Dar said: "The purchase of Aston Martin is central to our strategy of diversifying our holdings in key markets and international brands."

But like other carmakers, Aston Martin has struggled in the recession. The company cut 600 jobs, one-third of its workforce, at its plant at Graydon in Warwickshire in December. The factory has also suffered temporary closures.

The announcement of the Dar's standstill agreement marked the latest step by the company to shore up support after it defaulted on a $100m Islamic bond in April.

"The consenting banks and investors will, for the duration of the standstill agreement, suspend individual claims relating to investment arrangements," the Dar said in a statement, adding that it had asked investors and banks to detail the "size and nature of their claims" .

The standstill agreement is expected to run until the end of the year. The Dar has said it may sell some assets to meet its obligations.

The company said late last year it was seeking to borrow $1bn (£630m) to refinance, and had appointed Credit Suisse as an adviser in the restructuring process.

This month, Kuwait's central bank appointed a temporary supervisor to monitor debt restructuring and the publication of financial results at Dar. Dar said in July that it filed a court case against the country's central bank for not approving its 2008 financial data. Trading in Dar's shares has been suspended since 1 April, after the firm failed to submit its 2008 financial records on time.

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