The US investment bank Lehman Brothers, which sold its minority stake in Formula One last week to CVC Capital Partners, a private equity firm, is set to purchase a stake in the new ownership vehicle of the motor racing group.
The US bank took out an option to reinvest in Alpha Prema, the vehicle that CVC set up to buy the group. The option is valid for several weeks and Lehman is expected to exercise it shortly, say well-placed sources.
CVC, which bought Formula One from its long-time owner, Bernie Ecclestone, last November, received final European Commission approval for the purchase earlier this month. After striking the initial deal, CVC bought out the group's other major shareholders, Bayerische Landesbank of Germany and JP Morgan. Those banks, along with Lehman, received their stakes in the company after Kirch, the German media group, went bankrupt in 2002. Their Formula One interest was collateral for a $1.4bn (£800m) loan they made to the company.
JP Morgan sold to CVC in December. Lehman was the last shareholder to part with its stake and the only one to secure the option to reinvest. CVC and Lehman declined to comment.
Under the new ownership structure, CVC is the majority investor in Alpha Prema, which owns 100 per cent of Formula One. Mr Ecclestone, who will remain chief executive of the business, holds a significant stake in Alpha Prema, as does Bambino Holdings, a holding company controlled by his family.
As of December, the group had $661m of cash on hand and debt of just $144m, which the company has paid off ahead of the loan timetable, according to ratings agency Fitch.
The ownership structure under CVC is a much cleaner version than its previously labrynthine set-up. Last week, CVC bought companies that handle the marketing and advertising for Formula One and the VIP hospitality business. It also averted the defection of five rebel racing teams - BMW Sauber, McLaren, Renault, Honda and Toyta - to a rival racing series. They all signed a new concorde agreement, which sets out how Formula One and the various teams split revenue generated by the business.Reuse content