Formula One owners set to benefit from refinancing

Shareholders in Formula One are set to share a dividend of $1bn (€733.8bn) thanks to a refinancing of the motor racing business, according to the Reuters news agency.

Sources close to the deal confirmed a report by UK broadcaster Sky News that F1’s parent company is to increase its borrowings to $3.8bn from $2.8bn in order to fund the payout. The deal is being arranged by Bank of America Merrill Lynch.

CVC is currently the largest shareholder in F1 with a stake of approximately 35 per cent after first investing in the sport eight years ago.

Reuters said the new structure will not include any change of control clauses, meaning that CVC will not face any obstacles if it opts to sell its stake in the business. Various reports have linked media companies Liberty Global and Discovery Communications with a bid to acquire the combined 49 per cent stake currently owned by CVC and the estate of Lehman Brothers, the former US banking giant.

However, the situation is complicated by the ongoing uncertainty over the future of F1 chief executive Bernie Ecclestone. The 83-year-old is on trial for bribery in Germany in a case that is due to run at least until the middle of October.

Speaking earlier this month, Ecclestone said he is considering making a bid to retake control of the commercial rights to the motor-racing series. Ecclestone said he had held talks with CVC co-chairman Donald Mackenzie over the private equity group’s main shareholding in the sport. Ecclestone currently holds a five per cent interest in the sport.

CVC cut its F1 interest from around 63 per cent to approximately 35 per cent in 2012 through two separate deals. In June 2012, Waddell & Reed increased its stake in the business from around 14.4 per cent to 20.9 per cent in a $500m deal. The agreement with the American asset management company was announced after CVC sold a 21 per cent stake in the company for $1.6bn in May 2012 ahead of its mooted initial public offering (IPO) on the Singapore Stock Exchange. That deal also involved Waddell & Reed, along with global investment manager BlackRock and Norway's Norges Bank.