F1 Shareholders Race Towards £585m Windfall
Investors in Formula One (F1) motor racing are to share a $1bn (£585m) payout through a refinancing that will pave the way for a future change of control of the sport.
Sky News has learnt that Delta Topco, F1's parent, 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 $1bn 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 world's most glamorous motorsport.
It will also underline the ability of F1 to continue throwing off cash even as uncertainty remains over the sport's future leadership.
Bernie Ecclestone, F1's long-standing chief executive, is currently standing trial on bribery and corruption charges in Germany, and has stepped down from the company's board pending its outcome.
Sources said the debt refinancing would be the most significant since CVC Capital Partners, F1's biggest shareholder with a stake of just over 35%, bought into the sport in 2005.
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.
The new loan will not include any formal covenant and will extend the maturity of F1's debts to 2021, illustrating bankers' confidence in the resilience of its business model.
Its arrangement comes ahead of what is likely to be one of the closest fights for years, with Mercedes drivers Lewis Hamilton and Nico Rosberg in contention for the World Championship.
Analysts suggested that the £585m dividend plan signalled that a fresh attempt to float F1 on the stock market was some way off.
Although it paid a more modest dividend earlier this year under a long-standing agreement, the last payout on this scale came two years ago, shortly after F1 aborted a listing in Singapore amid the turmoil of the Eurozone debt crisis.
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.
The media groups, which are controlled by John Malone, have been in discussions about a deal that would involve acquiring the F1 shareholdings of CVC and the estate of Lehman Brothers, the former Wall Street banking giant.
The talks have slowed amid difficulties in reaching agreement about a valuation but are expected to continue.
One insider played down the prospect of an imminent deal.
CVC previously reduced its interest in F1 by selling shares privately to investors including Blackrock, Norway's sovereign wealth fund and Waddell & Reed, a US fund manager.
All of those investors, who bought into F1 at a valuation of $9.2bn (£5.4bn), will receive a share of the new dividend.
Analysts said it was arguable that F1 was worth more now because of the rise in stock markets since those deals were signed two years ago.
The dividend recapitalisation being presented on Thursday will increase Delta Topco's borrowings from $2.8bn (£1.6bn) to $3.8bn (£2.2bn).
As a 5.3% shareholder, Mr Ecclestone will also receive a windfall worth about £30m.
His trial in a Munich court, which began in April, relates to a $44m (£27m) payment to Gerhard Gribkowsky, a banker who helped orchestrate the sale of F1 to CVC in 2005.
A CVC spokesman declined to comment.