| NEW YORK
NEW YORK May 17 Formula One's new
refinancing loan has drawn an anchor order of $200 million from
an institutional account at 350bp over Libor with a 1 percent
Libor floor and a discount of 98 cents on the dollar, buyside
sources told Thomson Reuters LPC. The loan also has 101 soft
Meanwhile, investors are asking Formula One to pay them the
101 call protection on the existing loan in exchange for rolling
into the new loan. Formula One is trying to get around paying
the call premium, saying that it does not apply to repricings in
connection with an initial public offering (IPO), according to
several investors looking at the deal.
Standard & Poor's has placed Formula One's B+ corporate
credit rating on CreditWatch positive.
Formula One has been shopping a $1.3 billion term loan B due
June 2018 to institutional loan investors a mere three weeks
after clearing a $1.38 billion term loan B due April 2017
through the market.
Initial price guidance on the new $1.3 billion term loan B
was floated at 325-350bp over Libor with a 1 percent Libor floor
and a discount of 99 cents on the dollar.
The term loan B, along with a $50 million revolving line of
credit and a $450 million term loan A which is to be sold mainly
to bank lenders, will refinance Formula One's existing debt in
conjunction with the company's upcoming IPO.
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 2012-2014, $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
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.