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Brown plays down McLaren funding fears

NEWS STORY
13/09/2020

When McLaren secured a 150m loan from the National Bank of Bahrain earlier this year, fans breathed a huge sigh of relief as the deal ended speculation over the team's future.

As the team seeks to retain its hard-won fourth in the constructor standings, attracting new sponsors and looking forward to re-partnering with Mercedes however, the news that McLaren is seeking to sell its Woking facilities and lease them back had led to fears that the company is not yet out of the financial rough.

Indeed the financial damage inflicted by the pandemic in terms of drastically reduced sales of its sports cars and falling revenue from its F1 team after the season start was delayed by several months has hit McLaren hard, but speaking in video call with journalists, Zak Brown was keen to dismiss fears.

"We're going to issue a traditional sales lease back," said the American. "The majority of companies in this world don't actually own the real estate they are tenants of. We have a lot of cash tied up in that building and that is not a very productive use of funds when you're looking to invest in your business.

"We'll ultimately sell the facility to someone," he continued. "We'll then do an extremely long-term lease and then we'll use that money to help us grow our business. It's a pretty simple financial restructuring exercise."

"We have a good chunk of debt," he admitted, now Paul (Walsh, the McLaren Group's new Executive Chairman) is starting to set a direction to give us a stronger balance sheet, invest in the right areas, ultimately grow our companies and be financially a much stronger company.

"We're very excited," he insisted, the company looking to raise 200m from the sale.

"We're fine financially from a cash-flow standpoint," he continued. "When COVID hit and it turned off our F1 business, our automotive business and to a certain extent our technology business, that consumed an immediate amount of cash. We've now done that. We have now plenty of runway to make sound business decisions.

"I think the sale leaseback is a good decision. As while we will rent it, it'll be a lease so we're paying for it every year, the growth we'll be able to generate for our business by taking those resources and putting them into the business, we should be able to multiple the money we're giving because we'll be able to drive the business to the next level. I do think it's the right decision. That's why you see many corporations are just tenants of their buildings. They don't own their buildings.

"We have a good five-year business plan for this next era for Formula1, and I'm confident we have resources and people in place to give us what we want to get back to the front."

Check out our Sunday gallery from Mugello, here.

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