McLaren Sells Up to 33% Stake in Racing Unit to U.S. Investors

Want the lowdown on European markets? In your inbox before the open, every day.Sign up here.

McLaren has agreed to sell as much as 33% in its racing unit to a consortium of U.S.-based investors led by MSP Sports Capital, as the carmaker looks to raise funds to fix its finances while focusing on its automotive unit.

MSP Sports Capital will invest 185 million pounds ($245 million) in McLaren Racing to acquire an initial 15% stake, which will rise to a maximum of 33% by the end of 2022, McLaren said in a statement. The transaction would value the racing unit at 560 million pounds, the company said.

McLaren needs to refinance bonds due in 2022 and fix its finances to continue developing models that will allow it to compete with the likes ofFerrari NV. The closely held company has previously said it’sconsidering a sale of its headquarters in Woking, near London, and is reviewing options for its division that manufactures parts for Formula One racing teams and does contract work for other third parties.

McLaren probably needs to raise about 130 million pounds to boost liquidity to levels in line with its peers, Joel Levington, a Bloomberg Intelligence credit analyst, said in areport Thursday.

“McLaren’s use of financial leverage is very aggressive, given its history of negative cash generation and niche positions within highly cyclical and capital-intensive markets,” Levington said.

The carmaker has been struggling since the pandemic ravaged industry sales. A 300 million-pound equity raise early this year proved insufficient when revenue collapsed once the coronavirus forced companies to shutter factories and dealerships.

Source: Read Full Article