Formula One calms inquiry fears

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FORMULA ONE, the secretive company run by Bernie Ecclestone, yesterday tried to quash worries about an investigation into its affairs by the European Commission which are threatening to scupper its plans to raise $2bn from the sale of corporate bonds.

Formula One Administration, the holding company responsible for issuing the bonds, yesterday rushed out a statement stressing its belief that issues raised by the Commission investigation "have now been, or can be, dealt with".

The statement contradicts an investigation by the BBC Panorama programme, broadcast last night, which alleged that Mr Ecclestone had made misleading statements about the Commission investigation in an attempt to convince investors to buy the bonds.

The roadshow to sell the bonds moved into top gear yesterday, with 200 potential investors convening at a London hotel to hear a presentation about the company's prospects.

Formula One Administration is attempting to raise cash by selling bonds backed by future revenues from the sale of live television rights to Formula One races. Revenues from the rights are expected to grow over the next few years following the launch of digital television, which enables viewers to choose the camera angles from which they want to watch the race.

Formula One Administration's grip on the rights could be jeopardised by the Commission inquiry, which aims to determine whether the company's 15-year deal with the Federation International Automotive, the governing body, to secure the rights is anti-competitive.

Panorama claimed the Commission disagreed with Formula One Administration's suggestion that issues raised by the investigation could be dealt with. But the company yesterday pointed out that the Commission had not issued a formal statement of objection.

The bond issue, which is shrouded in secrecy, follows a failed attempt by Mr Ecclestone to float Formula One on the stock market last year. He has yet to disclose what the $2bn he raises will be used for.

Meanwhile, Warburg, Pincus, the fund management group, yesterday took an equity stake in Jordan Grand Prix, the Formula One racing team run by Eddie Jordan, for an undisclosed sum. The move comes after Mr Jordan admitted he was keen to attract outside investment. Dominic Shorthouse, managing director of Warburg, Pincus in London said: "Eddie Jordan has demonstrated all the qualities of a dynamic and successful entrepreneur. We now have the platform to build a championship winning team."