Aston Martin will raise about £260m by selling new shares and tapping costly debt as the luxury carmaker seeks additional funds due to the effects of the coronavirus.

The company will sell shares worth a fifth of the business to raise about £190m, while it will access $68m of a credit line that forces it to pay 12 per cent interest. 

Half of the debt repayment is in cash and half in shares, in a system called “payment in kind”. This is usually only used by weaker borrowers where lenders see an elevated risk that they will not receive full cash repayments.

Aston Martin secured the high-interest notes last year, but has so far avoided drawing down on the debt package. The latest fundraising is part of a plan by new chairman Lawrence Stroll to overhaul the company that has seen him name a new chief executive and finance boss and clear out the group’s board. 

Canadian billionaire Stroll led a £540m rescue deal earlier in the year, with the promise to revive the company. Its shares have sunk more than 90 per cent since listing in late 2018. 

The group saw a £120m loss in the three months to March.

Stroll has vowed to resize the business and restore its luxury credentials by only selling cars that have been paid for by customers, rather than filling showrooms in order to increase revenues. It reduced unsold dealer stock by 189 vehicles in April and May, after a reduction of 428 during the first quarter of this year.

Net debt, which climbed to £956m at the end of March, was £883m by the end of May, the group said. It had £244m of cash available. 

Due to the coronavirus pandemic, Aston Martin has been forced to shut down two of its factories and its dealerships worldwide. The group also secured a £20m loan from the UK government because of the interruption to its business due to the virus, taking the total funding increase announced on Wednesday to about £264m. 

More than 90 per cent of its showrooms have reopened, with half fully open and the rest running at reduced capacity because of social distancing. 

Production operations at St Athan, which will produce the all-important DBX sport utility vehicle, have restarted, while the group has recommended testing of the Valkyrie hypercar.

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