Formula One, Backed by CVC, To Pay $1 Bln Dividend

The latest in a series of PE dividend deals comes this week from Formula One.

The motor racing company has been in the market with a $2.3 billion recap, according to Thomson Reuters Loan Pricing Corp. The $2.3 billion package includes a $70 million revolver plus $2.2 billion in new loans. Moody’s Investors Service yesterday assigned a Ba3 rating to the $2.3 billion credit facilities. The Ba3 rating acknowledges Formula One’s “good level of revenue visibility from multi-year contracts with key commercial partners,” plus the cash generative nature of Formula One’s business with limited ongoing capital expenditure needs, Moody’s said. Also, the agency expects Formula One’s ongoing EBITDA growth and debt reduction will keep the company on a deleveraging trajectory.

CVC Capital Partners acquired a majority of Formula One in 2006 using $2.1 billion debt, LPC says. Of the $2.3 billion recap, Formula One plans to use about $1.06 billion to pay a dividend while another $1.8 billion will go to repay existing bank debt, LPC said.

The PE firm also plans on taking Formula One public. CVC has hired UBS and Goldman Sachs to lead an expected $2 billion IPO of Formula One in Singapore, Reuters has reported. CVC, which owns 63.4% of Formula One, is looking to list part of the business but would continue to hold shares, Reuters says.

Photo of race car courtesy of Shutterstock