Formula One refi brings shareholder payouts to $3.5 billion
By Claire Ruckin
LONDON (Reuters) - Motor sports company Formula One's latest $3.8 billion (2.23 billion pounds) loan refinancing pays a $1 billion dividend which brings total shareholder payouts to around $3.5 billion (2.05 billion pounds) in four separate debt deals, according to Thomson Reuters LPC data.
Bank of America Merrill Lynch is arranging the latest dividend recapitalisation, which refinances and increases existing debt to fund the $1 billion payment to shareholders which include private equity firm CVC Capital Partners, banking sources said on Wednesday.
The company's first dividend payout was in 2007, when Formula One's $2.1 billion 2006 buyout debt was increased to $2.92 billion. That was followed by two further shareholder payouts in 2012 in addition to the current $1 billion payout.
Shareholders took a $1.06 billion dividend in April 2012, which was followed by a further $1 billion dividend in October 2012, which was financed by issuing holding company bonds.
CVC declined to comment. Formula One was not immediately available to comment.
The current dividend recapitalisation increases Formula One's leverage to around 7.8 times leverage -- or debt to earnings -- from the current level of 5.5 times, one of the bankers said.
Leverage was two times when the company's buyout financing was completed in 2006.
The current $3.8 billion loan amends an existing $2.1 billion first lien loan and a 40 million euro (31.6 million pounds) first lien loan and increases the first lien loans by $1 billion, which funds the dividend payment.
As part of this deal, Formula One is also raising a new $1 billion second lien loan to refinance the existing 2012 private high yield bond, the banking sources said.
Lenders have been asked to commit to the deal by July 28. Existing lenders have been given the option to roll into the new financing without being repaid, the banking sources said.
PRICE POINT
The first lien loans pay 350-375 basis points (bps) with an Original Issue Discount (OID) of 99.5 and a 1 percent Libor floor, which guarantees a minimum return for investors.
The maturity of the loans is also being extended to 2021 from 2019, the banking sources said.
The second lien loan pays 675-700bps with an OID of 99 and a 1 percent Libor floor. The loans extend the 2019 maturity of the existing high yield bond to 2022, they added.
CVC is the largest shareholder in Formula One, with a stake of around 35 percent in the company.
Recent press reports said that John Malone's Liberty Global and Discovery Communications are in talks to buy a combined 49 percent stake in Formula One, which is owned by CVC and Lehman Brothers.
Formula One Chief Executive Bernie Ecclestone has also raised the possibility of a bid to buy back the sport's commercial rights, despite being on trial in Germany accused of bribery.
CVC may also consider an Initial Public Offering (IPO) of Formula One, but that is unlikely before the conclusion of Ecclestone's trial in Munich.
CVC pulled plans to float Formula One in Singapore in mid 2012, due to market turmoil and said last November that the IPO remained stalled due to Ecclestone's trial.
The private equity firm has been reviewing Formula One, which operates the motor racing Grand Prix series, for a potential sale, IPO or debt refinancing since March 2011.
(Editing by Tessa Walsh)
