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OCTOBER 18, 1999

Is Bernie Ecclestone selling out?


On October 28 href="../gpe/cref-eccber.html">Bernie Ecclestone celebrates his 69th birthday and while the boss of Formula 1 racing says that he is going to keep running the sport, despite the fact that he had major heart surgery during the summer, there are signs that he is slowing down. He has not been to a Grand Prix outside Europe for over a year and there rumors that he is looking for a buyer for Formula One Holdings.

Ecclestone tried to float FOH in 1997 but a disputes with the F1 teams and the European Commission led to the flotation being canceled. Ecclestone then engaged Morgan Stanley Dean Witter to underwrite a $2bn Eurobond. A prospectus was issued but investment banks were not keen and Ecclestone finally accepted a $1.4bn bond issue from Germany bank WestLB.

When that deal was announced in May Ecclestone said that he still intended to float the company but recently there have been stories that Bernie may be willing to sell half of FOH. And there are signs that Ron Dennis and Mansour Ojjeh - who are partners in the McLaren F1 team - are preparing a bid for the company. They have sold 40% of the TAG/McLaren empire to DaimlerChrysler, followed by the sale of their remaining shares in the TAG Heuer watch company. These two deals have raised around $550m. McLaren is working closely with private equity company Doughty Hanson & Co, which specializes in raising money for high technology businesses at the top end of the market.

All this has led to speculation that Dennis and Ojjeh intend to buy WestLB's Eurobond. This would give them stock options if the firm is floated but it may be that they will offer to trade the bonds for equity in FOH. That could save Ecclestone around $350m in interest payments and - with a phased deal which would allow Ecclestone to run the sport for a few more years - he may be interested.

A phased takeover would give Dennis and Ojjeh time to extricate themselves from McLaren and would also mean that FIA President Max Mosley - who is not a fan of Dennis - would be out of the way. His term of office ends in October 2001 but recently there have been suggestions that he is pondering an early departure.