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Old 21 May 2020, 19:54 (Ref:3977605)   #1
mogwai
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mogwai should be qualifying in the top 10 on the gridmogwai should be qualifying in the top 10 on the grid
McLaren emergency funding hits a snag

Apologies for the spacing on this. It's from a couple different sources.

For those who are interested in this type of thing, originally the plan was for McLaren to receive additional emergency funding. Below is the text of the BBG article earlier this month...further down is the snag...guess the assets are already pledged somewhere else.

If McLaren is facing these issues with what one perceives as the "moral" backstop of a Sovereign Fund (Mumtalakat), then one wonders how William's is holding on.

https://www.bloomberg.com/news/artic...in-new-funding
McLaren Group Ltd., the supercar maker and racing team owner, is seeking about 300 million pounds ($374 million) in fresh funding just months after completing a similarly-sized capital raise, people familiar with the matter said.The British company is working with an adviser as it examines ways to strengthen its finances, according to the people, who asked not to be identified because the information is private.

McLaren said in March that its existing shareholders had put in 300 million pounds of new equity. It also announced it had appointed Paul Walsh, the former chief executive officer of liquor giant Diageo Plc, as its executive chairman.

The company, controlled by sovereign wealth fund Bahrain Mumtalakat Holding Co., has been hit by the coronavirus pandemic which has delayed the Formula 1 racing series and forced it to halt automotive production. Automakers from Daimler AG to Renault SA have cut or scrapped guidance in recent weeks because of lockdowns tied to Covid-19.

Ferrari NV also lowered its earnings guidance for 2020 this week, saying it has seen several order cancellations and expected the reduced number of Formula 1 races to cut into its sponsorship income. U.K. luxury carmaker Aston Martin Lagonda Global Holdings Plc, which has struggled with cash flow, earlier this year raised 536 million pounds from a group led by billionaire Lawrence Stroll. Even after bringing in new investors, the coronavirus crisis has added a level of difficulty to the turnaround put in place with Stroll’s arrival.

McLaren’s 370 million pounds of secured notes due 2022 fell almost 6 pence on the pound Wednesday to a record low of 60.2 pence, according to Bloomberg CBBT prices. The company’s deliberations are at an early stage, and the exact structure of the potential fundraising hasn’t been finalized, the people said.

“Like other businesses we have been severely affected by the current pandemic,” a representative for McLaren said. “We are in continued dialogue with our banks and investors to help navigate these short-term business interruptions.”
McLaren is “looking at a severe liquidity crunch” which will be most acute in the middle of the year, chief financial officer Paul Buddin said on a conference call last month. It is working with its shareholders, relationship banks and advisers to pursue “a number of credible options” for funding, he said.

The company’s ability to sell cars during the second quarter has been severely impacted by the coronavirus outbreak, according to Buddin. While McLaren said that business forecasts are changing daily due to the uncertainty, it’s cutting investments and delaying the introduction of a vehicle based on its new platform to preserve cash.

But that effort has now hit a snag with some selected bondholders saying the assets area already pledged!

From an article on the terminal from earlier today.
"A group of McLaren Group Ltd. bondholders wants to block plans by the supercar maker to raise emergency funds by mortgaging its headquarters and historic car collection, according to people familiar with the matter.

Law firm Paul Hastings, acting on behalf of the creditors, sent a letter to the management of the company on Wednesday stating that the site and the classic cars are already pledged as collateral on $700 million of bonds sold in 2017, the people said, asking not to be named discussing private information.

“The notes benefit from first-ranking security over substantially all of the assets of the issuers and the guarantors, presumably including the heritage cars and the Woking headquarters,” Caitlin Carey, an analyst at credit research firm Covenant Review, said in a note, referring to the town in southern England where McLaren is based.

Here's the real crux of the matter and one wonders how much time they have to sort this out;
"The proposal to transfer the real estate and the historic car collection as a guarantee to new lenders would reduce the security package for existing bondholders and lower their potential recovery in case of insolvency or liquidation, the people said.

Bond holders don't take lightly to having their obligations suddenly put lower in the capital structure so the next few weeks are going to be crunch time it seems. Is it possible we could see McLaren fold before Williams???

Last edited by mogwai; 21 May 2020 at 19:59.
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