Bernie and Big Business

THERE have been a spate of stories in recent days suggesting that Bernie Ecclestone has decided to sell 50% of Formula╩One╩Holdings to a single - but unnamed - buyer for around $2.4bn. According to the Sunday╩Business╩newspaper in London the deal could be signed within a few weeks. Ecclestone will continue to run the company for the time being. This was followed by suggestions that the buyer would be a British offshoot of the giant investment bank Nomura╩Securities╩Co. Ltd. of Japan. Nomura's Principal Finance Group specializes in complex securitization deals involving the purchase of income-producing assets. It is headed by Britain's highest-paid banker Guy Hands. According to The Daily╩Mirror newspaper - and our sources confirm it - Ecclestone and Hands have been in negotiation for the last two╩months. Hands has built his reputation by doing deals which are funded by borrowing which is secured with the projected cash flows of the companies acquired. To date Hands has pulled off some spectacular deals such as his $2.7bn purchase of 57,000 homes, which had been owned by Britain's Ministry of Defence and a $1.5bn deal for the Thorn television rentals group. Nomura also controls 1,600 betting shops and 6,000 public houses in Britain.

It is worth noting, however, that other moves appear to be going on as well. At Monza on Sunday the McLaren team put out a very low-key press release announcing a corporate partnership deal with fund management company Doughty╩Hanson╩&╩Co.

This may not seem very significant but what is interesting is that Doughty Hanson has a track record of arranging big equity deals and manages a private equity joint venture between Standard Chartered Bank and Germany's West Deutsche Landesbank.

This may be significant. West LB was the major underwriter of Bernie Ecclestone's $1.4bn Eurobond issue in May. At the╩time it was announced that West LB would be holding on to its Eurobonds. If TAG McLaren offered to buy the Eurobonds from West LB it would be in an interesting position to start redeeming the bonds from Ecclestone in May 2002. The owners of the Eurobond issue would be in a very strong position to trade them for equity in FOH as such a transaction would be worth a fortune to Ecclestone. Not only would he be paid for the shares in FOH but he would also be offered the opportunity of avoiding having to pay the interest on the Eurobond issue. This may not sound very significant but when you consider the interest rates made public when the Eurobond was launched in May the sum of money involved between now and 2010 is around $350m. And with that kind of an incentive and a phased deal to allow Bernie to go on running the sport for a few more years it is quite possible that a sale could happen.

Inevitably much of this is speculation but the interesting thing will be to see whether the groups are in competition with one another or whether they are working together.

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