* Formula One back for new dividend recapitalisation
* Deal is fourth shareholder payout in seven years
* Extra debt pushes leverage up to 7.8 times
By Claire Ruckin
LONDON, July 23 Motor sports company Formula
One's latest $3.8 billion loan refinancing pays a $1 billion
dividend which brings total shareholder payouts to around $3.5
billion 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
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 ($53.88 million)
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.
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
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
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.
($1 = 0.7424 Euros)
(Editing by Tessa Walsh)