Formula 1 wraps up US$2.55 billion M&A, refinancing loan package
FORMULA 1 priced a US$2.55 billion loan package on Tuesday (Sep 10) to help finance owner Liberty Media’s acquisition of motorcycle racing association MotoGP World Championship after investor interest led to a refinancing transaction being added to the offering.
The racing circuit initially sought a US$850 million leveraged loan for the purchase. It later added a US$1.7 billion term loan refinancing.
The loans were priced two percentage points above the Secured Overnight Financing Rate and were issued at par, according to a source familiar with the matter who asked not to be identified as they are not authorised to speak publicly. Pricing was tightened earlier Tuesday from the initial talk. The margins can be reduced by 0.25 percentage point if Formula 1’s net leverage ratio falls to a certain level, the source added.
The new loan matures in September 2031, and the existing one was repriced last year at a spread of 2.25 percentage points.
There have been several instances this year, including by AssuredPartners, of firms coming to market for a leveraged loan and then subsequently adding plans to refinance or reprice other debt as financing costs have dropped.
Liberty Media declined to comment and representatives for lead bank Goldman Sachs did not immediately respond.
In a post-Labour Day issuance blitz, more than US$50 billion of leveraged loan deals have launched as investors take on riskier deals in a hot market with low volatility ahead of the US election. Barclays had projected as much as US$40 billion of launches for all of September.
Liberty Media, Formula 1’s parent company, announced in April that it would buy motorcycle racing league MotoGP from Bridgepoint and Canada Pension Plan Investment Board. The US$3.8 billion transaction would be funded by a combination of cash and shares, with an expected close at the end of the year. Formula 1 has seen increased popularity in the US after the success of Netflix’s documentary show Drive to Survive. BLOOMBERG
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