F1 in agreement with creditors to refinance $3.4bn
Motor racing’s Formula 1 has come to an agreement with creditors to refinance a $3.4 billion loan and credit line to overcome the financial impact of the coronavirus pandemic.
Liberty Media, the US media giant and owner of Formula 1, agreed refinancing terms with its subsidiary Delta Topco Limited, which holds all of its interests in the sport.
This includes a $2.9 billion loan and a revolving credit line available to the competition for $500 million. Under the new conditions, financial leverage will not apply until 1 January, 2022.
In exchange, Formula 1 will undergo a series of additional conditions to the current contracts, which includes maintaining a minimum liquidity of $200 million and certain restrictions on dividends, as well as other payments and not incurring additional debt.
Chase Carey, chairman and chief executive of Formula 1, said: “This new flexibility in our debt covenants, along with a strong balance sheet and ample liquidity, will enable us to weather this difficult time and we are excited to start the season in Austria.”
Last month Liberty issued Formula 1’s first quarter financial results showing a significant drop in revenue, reaching only $39 million in the first three months of 2020 as opposed to $246 million for the same period last year.
In April, it announced it had increased the sport’s liquidity and given some of its teams advanced payments to ensure their survival while the sport is suspended because of the pandemic.
The 2020 Formula 1 season, which was due to start in March, will get underway this weekend in Austria, with the first of eight behind-closed-doors European races condensed into 10 weeks.
Meanwhile, the FIA, motor racing’s international governing body, has agreed a multi-year partnership with SBG Sports Software, which becomes the exclusive official supplier of race control systems.
SBG will supply its circuit supervision and incident review system, ‘RaceWatch Race Control’, to major FIA-run series.
The system's applications, ‘RaceWatchMS’ and ‘RaceWatchID’, will provide an integrated marshalling, stewarding, video review, scrutineering and race management capability with live management of circuit action and review of data, video and radio communications.
The new deal extends the FIA's almost decade-long relationship with SBG Sports Software, with RaceWatch being used to officiate and manage races in the Formula 1 World Championship since 2011.
It has additionally been utilised in electric racing's Formula E and the FIA World Endurance Championship since 2015 and is now also being deployed in the FIA World Rally Championship.
As part of the new partnership, SBG will also join the FIA Industry Working Group leading the development of race management and safety technology for circuits worldwide.
Elsewhere, Zak Brown, chief executive of the McLaren Formula 1 team, has insisted the team’s financial issues have been resolved.
Brown’s declaration came just days after the McLaren Group launched legal action in an effort to secure urgent funding and to keep it from having to sell a stake in the team.
He told German automobile magazine Auto Motor und Sport that “the problems have been solved. You will hear positive news from us in the next few days."
McLaren last week said it was facing an “impending liquidity shortfall”, which required new funds to be injected “no later than 17 July” due to financial hardship brought about by the pandemic.
In other developments, Mercedes will use a new black livery on its cars this season in an effort to promote greater diversity and inclusion in the sport.
The team had used silver as its colour scheme since the 1930s.
Mercedes said the Black Lives Matter movement had "shone a searching light on how much we need new measures and actions in the fight against racism."
The team will also launch a diversity and inclusion programme that will include raising awareness, analysis of its recruitment programme, collaboration with Formula 1 stakeholders on accessibility and education initiatives.