Reuters: Private Equity: RLPC: Formula One unveils $1.8B refi tied to IPO

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RLPC: Formula One unveils $1.8B refi tied to IPO May 11th 2012, 13:07 By Smita Madhur NEW YORK | Fri May 11, 2012 9:07am EDT NEW YORK May 11 (Reuters) - Formula One launched its $1.8 billion loan, which will refinance its existing debt in conjunction with the company's upcoming initial public offering (IPO), sources told Thomson Reuters LPC. The loan includes a $50 million revolving line of credit, a $450 million term loan A, which is to be sold mainly to bank lenders, and a $1.3 billion term loan B due June 2018, which is to be sold to institutional accounts. Price guidance on the term loan B is 325-350bp over Libor with a 1 percent Libor floor and a discount of 99 cents on the dollar. Formula One is floating these terms based on an expected upgrade of its corporate family ratings by one notch to Ba2/BB-. The issuer will repay its existing loan at par. The new loan will continue to have covenants governing leverage and interest coverage. Pro forma for the new loan, net leverage would drop to around three times from 4.5 times in April, sources said. As previously reported, the refinancing is contingent on a successful IPO of the company. Formula One is expected to complete its IPO by around June 14. Last month, Formula One sold to institutional loan investors in the U.S. and Europe a $1.38 billion term loan B due April 2017. That loan was priced at 450bp over Libor with a 1.25 percent Libor floor. It was offered to investors at 99 cents on the dollar. The rest of the credit was filled out by a $70 million revolving line of credit due 2017 and an $817 million term loan C due 2018. The term loan C is said to have been sold to "friends and family" of Formula One sponsor CVC Capital . Formula One proposed to use the funds from the overall $2.267 billion credit as follows: $1.784 billion to repay existing bank debt due 2012-14, $1.06 billion to issue a dividend, $46 million to put cash on the balance sheet and another $46 million in estimated fees and expenses. As part of the dividend recap, the refinancing allowed Formula One's shareholders, including majority owner CVC Capital, to transfer around $1 billion of cash to holding company Delta Topco for a range of purposes, including dividends and acquisitions. CVC Capital bought Formula One in April 2006, backed by $2.1 billion of debt. In 2007, the debt was recapitalized with $2.92 billion of debt consisting of an $800 million term loan A at 200bp over Libor, a $1.4 billion term loan B at 237.5bp over Libor, a $70 million revolving credit at 200bp over Libor and a $650 million second-lien loan at 350bp over Libor. Link this Share this Digg this Email Reprints

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