Reuters: Private Equity: UPDATE 1-RLPC-Formula One to raise $1bn in loan refi -source

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UPDATE 1-RLPC-Formula One to raise $1bn in loan refi -source Mar 27th 2012, 12:06 Tue Mar 27, 2012 8:06am EDT * F1 shareholders take $1 billion in $2.2bn loan refi * Funds to be used for dividend payments, acquisitions * Loan refinancing to be sold in Europe, U.S. By Tessa Walsh LONDON, March 27 (Reuters) - Shareholders in motor racing group Formula One (F1) are raising $1 billion from a loan refinancing which will be paid into a holding company for future dividend payments and acquisitions, a person familiar with the matter said on Tuesday. The funds, which were on the company's balance sheet, will be paid into holding company Delta Topco and will be used by shareholders for a range of purposes, the person said. The $2.2 billion loan refinancing is unrelated to reports of a possible IPO of some of the company, the person said. There is no formal plan for an IPO, he added. "This is a refinancing and a dividend which is taking out $1 billion. The cash on the balance sheet is close to that," an investor said. Formula One's shareholders include CVC which owns 63.4 percent of the company, Lehman Brothers' administrators with 15.3 percent, Chief Executive Officer Bernie Ecclestone 5.3 percent and Ecclestone's former wife Slavica's Bambino Holdings with 8.5 percent. Goldman Sachs is said to be leading the dollar-denominated dividend recapitalisation and loan refinancing and maturity extension. Goldman Sachs was not immediately available for comment. The refinancing was prompted by Formula One's looming loan maturities in 2013 and 2014, which will be extended until 2017 and 2018, several sources said. CVC acquired majority control of Formula One in 2006. The shareholders have recapitalised the debt several times and paid themselves at least one other dividend -- a $2.1 billion dividend payment in 2007, a third investor said. The refinancing will offer investors a margin of 500 basis points (bps) over LIBOR, with a LIBOR floor of 125bp to guarantee returns for investors, the investors said. The dividend recapitalisation will increase Formula One's leverage from 2.3 times Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) to 4.3 times, they added. CVC started a strategic review of Formula One in early 2011 for a potential sale, IPO or debt refinancing. U.S. SALE Formula One joins many European companies including Netherlands-based broadband provider UPC Holdings which are choosing to take advantage of strong demand to refinance leveraged loans in the more liquid U.S. market. Arranger Goldman Sachs is selling Formula One's loan refinancing in the United States and Europe. Bank meetings will be held in New York on March 28 and in London on March 30 and commitments are due on April 12. Formula One derives most of its revenue in dollars, which makes it a strong candidate for a U.S. sale, although U.S. investors are less familiar with the company. "U.S. investors are more nervous, they don't understand Formula One as there's no Grand Prix in the U.S.," a leading investor said. European investors are still finding it difficult to invest in dollar loans. Dollars remain scarce and expensive. "One of the toughest issues here in Europe is dollars. CLOs (Collateralised Loan Obligation funds) have a problem buying them - there's no capacity," the leading investor said. Investors will also be keen to see a resolution to negotiations with teams on agreements that expire after this year which would see the teams signing up through 2010. Link this Share this Digg this Email Reprints

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