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Cost of Aston Martin’s Product Plan Worries Investors

Several analysts are recommending that investors sell the Aston Martin debt they hold because of the cost of the British luxury carmaker's product development plan, Bloomberg News reports.
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Several analysts are recommending that investors sell the Aston Martin debt they hold because of the cost of the British luxury carmaker's product development plan, Bloomberg News reports.

The news service says Aston Martin has 304 million (€370 million) in bonds due in 2018. The company is spending about 500 million (€608 million) on a four-year plan to develop next-generation models and expand its product lineup.

Aston Martin's global sales grew 11% to 4,200 cars in 2013, and revenue climbed 13% to 519 million (€630 million). The company hopes to double global sales by 2016.

Last month the company declared itself on a "solid foundation" in part because of its new partnership with Daimler AG. In December Daimler acquired 4% of Aston Martin in exchange for supplying the company with engines. Daimler has the option to increasing its stake to 5% by expanding the supply arrangement to include electronics and other components.

Skeptical analysts note that the independent British manufacturer may be facing a losing battle to match the performance, fuel efficiency, emission levels and selling prices of its competitors all of whom are affiliated with large and richer manufacturing groups.

Bloomberg cites a Barclays analyst who says Aston Martin will generate negative cash flow of 70 million and have a ratio of net debt to EBITDA of 4.7 this year.

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