In October of 2018, Aston Martin reported that it had sold the tooling and intellectual property of the Vanquish to a mystery buyer for $26 million. Now, Aston Martin has reported that the mystery buyer was Detroit Electric and, well, Aston shareholders may not actually be seeing most of that $26 million.
According to Automotive News Europe—and spotted by Motor1—the company submitted a provision for doubtful debt of 19 million British pounds. Essentially, they’re saying that they no longer expect to make the money they reported as income when the deal was inked.
Detroit Electric, which the name makes totally clear is based in Hong Kong, was supposed to receive the plans, equipment and consulting expertise required to turn the Vanquish bodywork into a new EV. But by the time the deal was reported, the company was already late on its payments.
From the story:
With contracts inked, Aston Martin said it expected the cash to arrive in 5 million pound twice-yearly installments. In hindsight, it was not a good sign that the first of these payments was already overdue at the time the prospectus was published.
More than a year after the contract was agreed, Aston Martin has acknowledged that it may never recover the bulk of the money. A disappointing set of results published last month included a one-off 19 million pound provision for doubtful debt.
[...] Attempts to reach Detroit Electric for comment were unsuccessful. The latest available accounts of Detroit Electric’s UK subsidiary show a loss and net liabilities for the 2017 financial year, while indicating that financial support from group companies remained available.
It’s unclear whether Detroit Electric was unable come up with the cash or chose not to pay, but considering the difficulty Western companies have with legally going after Chinese companies, Aston isn’t expecting to see any more cash from the deal.
That’s extra tough considering that Aston is one of the few remaining independent auto companies. Not only that, but its stock has been hit hard by the company’s high debt to income ratio. Erasing $20 million of income won’t help that.
They’re looking for a new buyer if, ya know, you’re in the market.