Group Created with Sketch.
Volume 6 No. 262
  • Created with Sketch.
  • Created with Sketch.
  • Created with Sketch.

Lehman Brothers Creditors To Enjoy $1.5B Payout From Sale Of Formula 1

Creditors of Lehman Brothers "are on track for a turbocharged windfall" after the collapsed bank announced it is selling its stake in NASDAQ-listed Formula 1, giving it a payout of $1.5B from a $300M investment, according to Christian Sylt for the London GUARDIAN. The offering "also brings the chequered flag down" on former F1 CEO Bernie Ecclestone's time as a shareholder. The billionaire business magnate "is offloading his remaining stake" for $20M. Ecclestone "first took over the wheel of F1 40 years ago and transformed it from being an amateur hobby" into a race series which had revenue of $1.8B last year. Together, Ecclestone and his Bambino family trust have made an estimated $4.9B from dividends and the sale of their shares. Lehman has been involved with F1 since '02 when it gave a $300M loan to German media firm Kirch to finance its purchase of shares in the sport. The loan "was secured on the shares so when Kirch went into Chapter 11 bankruptcy in the same year it left Lehman with a 14.2% stake in F1." Four years later, Lehman sold its stake to CVC for $209.3M, which was "less than the loan it provided to Kirch." However, this was "only a loss on paper as Lehman made the smart decision to reinvest the money in F1," giving it a 15.1% stake. In '08, Lehman went into Chapter 11 bankruptcy and moved its F1 stake from its bankrupt arm, Lehman Commercial Paper, into LBI Group, a "newly formed holding company containing the valuable assets in its portfolio." LBI’s purpose is to "generate cash from its assets which is then used to pay Lehman’s creditors" (GUARDIAN, 9/21).

MAKING A SPLASH: THE DRUM's Shawn Lim reported analyst Blis unveiled insights from the recently concluded Singapore F1 Grand Prix, which found that the race "brought in a huge commercial benefit to the local economy." The analysis showed a "173% jump in mobile activity at key local restaurants and an 82% lift at local shopping malls during the race weekend," as compared with normal weekend activities. Overall, the weekend saw a "413% increase in traffic to key restaurants and a 332% jump at shopping malls," when compared to activity observed throughout the week. F1 grandstand locations were also nearly 500% busier on race weekend (THE DRUM, 9/22).