| NEW YORK
NEW YORK May 18 Formula One has
priced its $1.3 billion institutional term loan B at 350bp over
Libor with a 1 percent Libor floor and a discount of 98 cents on
the dollar, sources told Thomson Reuters LPC.
The issuer has also added a 100bp annual ticking fee, which
is to be paid from the loan's allocation date till its closing
date or cancellation. Formula One will pay the fee whether or
not it lists its initial public offering (IPO). The maximum
amount of the payment is capped at around $1.6 million.
If the IPO is not priced by June 30, the term loan
commitments will be cancelled. But the loan commitments will be
available for another 10 days if the IPO pricing occurs by June
30. Formula One is aiming for a June 14 IPO.
Essentially, the new term loan becomes effective upon the
completion of a successful IPO. If the IPO is unsuccessful,
Formula's One's existing $1.38 billion term loan B from April
will stay in place.
As per the terms of the new loan, the existing loan must be
repaid in full. "The new facilities are $450 million less than
the existing facilities, so this would force at least that much
debt reduction," said a buyside investor committing to the new
Commitments to the new term loan are due today at 4:00 p.m.
Goldman Sachs and RBS lead the loan.
Yesterday, Formula One was believed to have received 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 call protection.
Meanwhile, investors had been dissatisfied with Formula
One's decision not to pay them the 101 call protection on the
existing loan in exchange for rolling into the new loan. Formula
One told lenders that the call premium on the existing loan did
not apply to repricings in connection with an IPO, according to
several investors looking at the deal.
Formula One's existing corporate family and facility ratings
are Ba3/B+ and Ba3/BB-, respectively. They are both expected to
be raised to Ba2/BB- and Ba2/BB, respectively.
Formula One has been shopping the new $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 new term loan B, along with a $50 million revolving line
of credit and a $450 million term loan A marketed mainly to bank
lenders, will refinance Formula One's existing debt in
conjunction with the company's upcoming IPO. The $50 million
revolver and $450 million term loan A are priced at 275bp over
The new loan will continue to have covenants governing
leverage and interest coverage. Pro forma for the new loan,
total leverage would drop to 3.28 times from 4.5 times in April,
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
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.