Formula One mired in debt
The Sunday Telegraph has learnt that CVC, whose other investments include the company behind Saga/AA and Merlin Entertainment, took advantage of the dip in interest rates in the economic downturn to begin repaying debt.
Bernie Ecclestone, the sport's chief executive, told The Sunday Telegraph that a lot of the debt had been paid off.
David Bruce, vice-president of fixed income at Markit Group, which charts credit pricing, added that one of F1's term loans had been paid down.
CVC owns a 63.4pc stake in Delta Topco, F1's Jersey-based commercial rights-holder, and it financed its leveraged buyout in 2006 with $550m of debt from Lehman Brothers and $2.3bn believed to have come from Royal Bank of Scotland. In 2009 Delta Topco made interest payments of around $157.5m.
CVC secured the debt at the top of the market and there were concerns that F1's business model could crash as a result of the economic crisis and infighting in the sport.
Since CVC secured the debt it has been syndicated to private investors who have had a roller-coaster ride. According to Markit, the F1 debt reached a low of 50pc in the pound in March 2009, three months after Honda pulled its team out of F1 in the midst of the recession.
The debt price sputtered as BMW, Toyota and Renault followed Honda out of the sport but it had accelerated to 82.5pc by August 2009 when the remaining teams signed an agreement committing them to stay in F1 until the end of 2012.
Last year F1 added South Korea to its calendar to give it 19 races – its most ever. This boosted income from race hosting fees by 20pc to $535m according to F1's industry monitor Formula Money.
As interest in the new season has increased, the debt price has risen 2.1p since January to a high of 99pc last week. The Telegraph