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Bernie buys a bigger slice of F1

NEWS STORY
12/02/2009

There may be a dearth of real on-track action at the moment but behind the scenes the teams are working overtime to sign sponsors and ensure they stay on-track this season. F1's rights-holder has less to worry about since it has long-term contracts with cash-rich governments and it seems that CVC, the finance firm which owns the majority of the business, is looking further down the line.

According to an article in today's Financial Times written by Pitpass' financial sleuths Chris Sylt and Caroline Reid, CVC has issued and handed out new shares in F1's Jersey-based holding company in a bid to incentivise the management. It doesn't sound like the kind of thing you do if you're planning to sell up.

The biggest beneficiary of the new share issue is F1's boss Bernie Ecclestone who previously owned just 0.00001% of the Delta Topco holding company. He now has a 5.3% stake which would be worth around $100m if the business was sold for the $2bn which CVC paid for it in 2006. It is another legendary deal for Bernie to add to his collection since the documents Sylt and Reid were handed by their source in Jersey show that just $530,000 was paid for Ecclestone's stake.

Bernie is the only one of F1's original shareholders whose stake has increased with even the share owned by his family trust dipping from 9.4% to 8.5%. By issuing just over 90 million new shares CVC's own stake decreased by just over 6% to 63.4%. And the reason it did this wasn't to line Bernie's pockets.

Delta has two independent directors, Sir Martin Sorrell, boss of advertising firm WPP, and Peter Brabeck-Letmathe, who runs the confectionery company Nestlé, and both now have 0.3% stakes in F1's holding company.

They are joined by several other new shareholders. First up is Bernie's longtime ally, his in-house lawyer Sacha Woodward-Hill. Then there is F1's in-house accountant Duncan Llowarch and Patrick McNally, founder of Allsport, F1's hospitality division. Allsport executive and former Australian GP boss Judith Griggs is the final new shareholder. McNally has a 1% stake with the others having slightly less.

These new shareholders are not a great surprise since in the original press release trumpeting its F1 acquisition, CVC stated that the sport's management would have some ownership but, until now, the only member of the team to hold a stake has been Ecclestone.

What is more surprising is that, after CVC, the second-biggest Delta shareholder is bankrupt bank Lehman Brothers. CVC's UK managing director Nick Clarry has told Sylt that CVC has first refusal over the shares of any Delta shareholder which goes bust but it seems that CVC has yet to swoop on Lehman's stake.

This latest change in F1's ownership is not just of interest to those in the sport's corridors of power. It doesn't seem likely that CVC would give the shares away if it planned to sell up soon. On the contrary, it gives F1's management an incentive to stay perhaps longer than they expected and watch their investment grow. For the first time in a long while, F1 has a stable set of owners at the wheel and in the current turbulent economy that could be just what it needs.

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