F1 on profit lap as Libor falls

The commercial rights holder of Formula One motor racing, which is majority-owned by private equity firm CVC, has benefited from the downturn as falling interest rates allowed it to reduce its debt last year.

Accounts to 31 December 2008 for Delta 3, F1's London-based holding company, showed a 13 per cent rise in turnover to $1bn (£600m) due to an increase in race hosting fees.

CVC borrowed $2.8bn from RBS and Lehman Brothers to buy F1 in 2006 and over the past year there were fears that it could default due to an increase in prize money from $342m in 2007 to $521m, causing the operating profit to plummet 58 per cent to $86.4m.

However, the debt repayment accelerated as the loan is pegged to the London inter bank lending rate (Libor) which crashed last year. This led to interest charges being 26 per cent lower than in 2007. Delta 3 also repaid $83.7m of the principal and restructured its lending. "We expect to pay off $1bn over the next five years," said Nick Clarry, CVC's UK managing director.