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SBD Global/July 18, 2014/Finance

F1 Shareholders To Split $1B Payout Thanks To Parent Company Delta Topco's Refinancing

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Investors in F1 are to share a $1B payout through a "refinancing that will pave the way for a future change of control of the sport," according to Mark Kleinman of SKY NEWS. F1 parent company Delta Topco is "arranging a deal known as a dividend recapitalisation which involves increasing a company's borrowings in order to fund a shareholder payout." Plans for the $1B dividend are "understood to be being discussed with potential investors in New York later on Thursday, with F1's owners confident of attracting robust demand." The payout will be the "biggest to F1's shareholders for two years, and will augment their already handsome returns on their investment" in the sport. It will also "underline the ability of F1 to continue throwing off cash even as uncertainty remains over the sport's future leadership." Crucially, the "new debt package will not include any change-of-control clause, making it theoretically easier for F1's parent company to be sold without triggering onerous repayment obligations." The deal, which is being arranged by Bank of America Merrill Lynch, will "also highlight the continued buoyancy of international financing markets." Analysts suggested that the $1B dividend plan "signalled that a fresh attempt to float F1 on the stock market was some way off." Paradoxically, the structure of the deal could "hasten a takeover of F1, with Liberty Global and Discovery Communications interested in acquiring a 49% stake in the sport" (SKY NEWS, 7/17).
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