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McLaren turns to Bahrain bank for help

NEWS STORY
25/06/2020

We previously reported that as the company seeks fresh funding it has had to resort to legal action against a number of bond holders who are blocking attempts to raise the cash against various assets, including the factories and the F1 team's historic car collection.

The bond holders insist that those assets are already being used as collateral against existing loans and that they would lose out if the money owed by McLaren was no longer secured on the assets.

Though they suggested an alternative financing plan, this was dismissed by McLaren which subsequently took legal action in the hope that the judge will release the assets.

In legal filings for a hearing in London's High Court on Friday, McLaren said that "the Proposed Transactions will enable the Group to access the additional liquidity that is required to ensure that the Group can continue as a going concern into 2021. This will provide a significant benefit to the creditors of the Group (by preventing a cash flow crisis and a value destructive insolvency)."

In other words, McLaren warns that it will become insolvent if the Note holders don't allow it to release the assets from the security and sell them or secure a new loan on them.

To further complicate matters, it warns that the judge must issue a declaration in favour of McLaren in 17 days in order to get the deal done.

The filings reveal that "the Group needs to obtain declaratory relief in advance of 17 July 2020. Due to the period of time required to sign the contractual documentation and arrange for the relevant funds to be paid, declaratory relief would in fact need to be granted at least five business days before the funds are required. In other words, declaratory relief is required by no later than 10 July 2020."

Now, Sky News, Mark Kleinman - who appears to have a source at McLaren, and only McLaren, on speed-dial - says that the company is looking to secure a loan from the National Bank of Bahrain (NBB).

However, NBB is part-owned by Bahrain's Mumtalakat sovereign wealth fund, which already has a 57.7% stake in the company, which has led to fears that the loan could give it additional leverage.

Ironically, Mumtalakat has refused to inject further cash into McLaren following the £300m ($368.8m) it and fellow shareholders injected into the company earlier this year as it scaled down production of its supercars.

However, once the pandemic took grip the money had to be diverted in order to keep the company going and it soon became clear that even more cash would be required.

Even if the loan is granted, McLaren may continue with its legal case, as it believes it has the right to raise cash against its assets.

The F1 team was the first to take advantage of the taxpayer-funded furlough scheme, and revealed last month that it is to shed 70 staff as part of the company's drive to cut 1,2000 jobs.

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READERS COMMENTS

 

1. Posted by BrightonCorgi, 26/06/2020 20:41

"Ron Dennis & Martin Whitmarsh should take a charge at reclaiming a major stake in McLaren again. It was much better company & team when they were involved."

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2. Posted by Editor, 26/06/2020 13:12

"@ Simon in Adelaide

When we refer to the McLaren group we mean the F1 team, the supercars (Automotive) and Applied Technologies. It is the group as a whole that needs cash.

The story we have been "hinting" at recently doesn't involve McLaren."

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3. Posted by Motorsport-fan, 26/06/2020 12:45

"@ Simon in Adelaide

Sorry no inside knowledge, but the latest action for funds relates to the Mclaren Group, so assume it includes the race team as well, could this be the Pitpass story they have been hinting at over recent weeks?"

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4. Posted by Simon in Adelaide, 26/06/2020 6:57

"@ Motorsport-fan

Is that speculation or inside knowledge?

I was under the impression, probably mistakenly, that the F1 team and the road car division were separate entities so as to avoid this sort of situation."

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5. Posted by Motorsport-fan, 25/06/2020 15:26

"Its purely the complete mis-management of the road car side of Mclaren that has created this situation. "

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6. Posted by GordonG47, 25/06/2020 12:41

"Um, Daniel, are you sure you've made the right decision?"

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7. Posted by trackrecords, 25/06/2020 10:19

"It's amazing that a F1 team/supercar maker can be so hand-to-mouth. Would it have happened under Ron is the wonder...
"

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