Canada Pension Plan Investment Board provided part of Formula One’s $1 billion private placement high-yield debt financing due in 2019, its second motorsport- related deal announced today.
Canada’s largest pension fund manager loaned $400 million to the auto racing series partly owned by CVC Capital Partners Ltd., the Toronto-based fund manager said today in a statement. Canada Pension earlier said it bought a 39 percent stake in Dorna Sports S.L., the Madrid-based sports management company that holds the rights to the MotoGP motorbike racing series and FIM World Superbikes Championship.
“We saw the attractiveness in those two investments,” Andre Bourbonnais, Canada Pension’s senior vice president of private investments, said. “On one side because of the growth on the equities side, and on the other side for the more stable business on the debt side.”
Other lenders in the Formula One financing include U.S. mutual fund Waddell & Reed Financial Inc. (WDR), BlackRock Inc. (BLK) and Goldman Sachs Group Inc., Bourbonnais said in a telephone interview from Toronto.
Moody’s Investors Service cut the rating on Formula One’s bank loans by one level to B1 on Oct. 19 as the company’s leverage will “materially increase” to more than six times this year after issuance of the $1 billion subordinated debt, which will be used to fund dividend payout to shareholders.
Canada Pension didn’t disclose the price for its investment in Dorna Sports, whose shareholders include Bridgepoint and Dorna management.
Bridgepoint and Canada Pension hired Societe Generale SA to lead banks arranging about 485 million euros ($625 million) of loans to refinance debt of Dorna, according to two people with knowledge of the matter. Bank of Ireland, Goldman Sachs Group Inc. and ING Groep NV, existing lenders to Dorna, are also arranging the loan, said the people, who asked not to be identified because the deal is private.
James Murray, a spokesman in London for Bridgepoint, declined to comment on the debt financing.
The financing includes senior and junior-ranking debt and will represent about six times the company’s forecast 2012 earnings before interest, tax, depreciation and amortization of 80 million euros, said the people. Part of the deal includes 85 million euros of debt from Goldman Sachs to fund repayment of shareholder loans, said the people.
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