26.4.12

This article was written by Roger Blitz and first appeared in
The Financial Times

Formula One is stepping up preparations for a flotation on the Singapore stock exchange, lining up Peter Brabeck-Letmathe, Nestlé chairman and chief executive, to chair the parent company of the motor racing series.

CVC Capital Partners, the private equity group that holds F1’s commercial rights, last month said it planned to refinance its acquisition loan.

Mr Brabeck-Letmathe is a longstanding non-executive board member of Delta Topco, F1’s parent company.

CVC has previously sought out Sir Stuart Rose, former Marks and Spencer chairman, to take the chairmanship of Delta Topco, but the approach was never followed through.
Mr Brabeck-Letmathe will take the chairmanship if the flotation proceeds, which is pencilled in for June and which is expected to offer up to 30 per cent of shares to investors.

Although CVC has previously said it had no plans to use proceeds from the float to pay a dividend, it is understood that up to $1bn could be returned to shareholders.
The refinancing is being handled by Goldman Sachs and Royal Bank of Scotland, with Morgan Stanley and UBS also added to the roster of banks.

CVC held a meeting for analysts in London on Tuesday and is expected to stage a series of investor roadshows in the weeks ahead. CVC declined to comment.
Among issues that need to be settled is the signing of long-term agreements with F1 teams regarding their share of revenues. In-principle agreements have been reached with Ferrari and Red Bull, which may result in them taking board positions on Delta Topco.

The so-called Concorde Agreement is likely to secure deals with the teams lasting until 2020.

Donald Mackenzie, CVC co-founder, will retain one of CVC’s board positions, while Bernie Ecclestone will continue as F1 chief executive.

The Singapore exchange has also been targeted by Manchester United for a part-flotation, although the Premier League club’s preparations have stalled because of IPO market conditions.

Both F1 and Manchester United are attracted to Singapore because of the Asian interest in their international sporting brands.

CVC’s flotation preparations come after a difficult week for F1, which saw pro-democracy demonstrators in Bahrain hold marches and clash with authorities over the staging of the Grand Prix.

CVC bought a majority stake in F1 in 2006 for $1.7bn. It has twice before refinanced its debt and it is seeking to reduce the size of loans to £2.3bn and extend their maturity dates to 2017 and 2018.