$1.4bn `Bernie Bond' paves way for F1 float

BERNIE ECCLESTONE, the motor sport entrepreneur, has raised $1.4bn from the City through a long-awaited and much delayed bond which is designed to pave the way for the flotation of his Formula One motor racing business within the next three years.

The "Bernie Bond", which has been placed with banks in the UK, and Western Europe, has taken nearly a year to get away. The decision to tap the bond markets follows the collapse last year of earlier attempts by Salomon Brothers to float the business after squabbling between Formula One and the racing teams over how to carve up the massive television revenues on which Mr Ecclestone's fortune rests.

The funds will go to a series of trusts controlled by Mr Ecclestone's wife and family.

Investors who baulked at the size of the issue last year were only persuaded to take the paper after WestDeutsche Landesbank, the aggressive German state-owned institution, muscled into what was originally a Morgan Stanley deal and persuaded them to cut the size of the issue from $2bn to $1.4bn, sweeten the terms and reduce the duration of the bond from 20 years to 10 years.

West LB has also taken a large amount of the issue - believed to be around 20 per cent - on to its books, as has Morgan Stanley as joint underwriter, although Morgan Stanley insisted yesterday there was a "strong investor appetite for the bonds" .

Morgan Stanley was joint lead and bookrunner and will remain the financial advisor for the flotation.

Robin Elizabeth Smith, who heads the bond team that WestLB poached from Deutsche Bank last year, said that it was clear when the bank first approached Morgan Stanley last year that the deal was "languishing" and needed to be repackaged in order stand a chance of success.

"My personal view was that selling 20 year future revenue bonds for $2bn with a single A rating was a very tall order. People were saying if you are planning to float the business in two to three years why do you need a 20 year bond? Why not put your money where your mouth is?" she said.

After changing the terms, the banks were able to get the top four rating agencies to rate the bonds. The bonds which will be listed shortly on the Luxembourg stock exchange now carry a coupon of 1.3 per cent over US$ six month's Libor (the London Interbank Offered Rate) for the first three years by which time the flotation should have gone ahead and the proceeds been repaid. If, by that stage, Mr Ecclestone has still not succeeded in getting the flotation away, the coupon rises sharply to 2 per cent over Libor for the next two years rising to 3 per cent after five years for the remaining lifetime of the bond, giving Mr Ecclestone a strong financial incentive to ensure the flotation takes place as planned. The original proposal was to pay a flat coupon of 1.5 per cent over Libor for the entire lifetime of the 20 year bond.

Mr Ecclestone said yesterday: "Now that we have successfully completed this transaction, we look forward to the future stock market flotation of this existing business. We can now build on the relationships we have established in the investment community."

Outlook, Page 22

News
people
Sport
FootballGerman sparks three goals in four minutes at favourite No 10 role
News
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Sport
A long jumper competes in the 80-to-84-year-old age division at the 2007 World Masters Championships
athletics
PROMOTED VIDEO
Sport
Radamel Falcao was forced to withdraw from the World Cup after undergoing surgery
premier leagueExclusive: Reds have agreement with Monaco
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Life and Style
Walking tall: unlike some, Donatella Versace showed a strong and vibrant collection
fashionAlexander Fury on the staid Italian clothing industry
Arts and Entertainment
Gregory Porter learnt about his father’s voice at his funeral
music
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
Life and Style
Children at the Leytonstone branch of the Homeless Children's Aid and Adoption Society tuck into their harvest festival gifts, in October 1936
food + drinkThe harvest festival is back, but forget cans of tuna and packets of instant mash
Sport
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
New Articles
i100
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam