McLaren receives Β£300m.......

McLaren receives Β£300m.......

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MAC 720S

Original Poster:

906 posts

101 months

Sunday 26th April
quotequote all
McLaren receives £300m jump-start to keep wheels turning during coronavirus pandemic.

https://www.thisismoney.co.uk/money/markets/articl...

AndrewD

7,067 posts

238 months

Sunday 26th April
quotequote all
That’s not quite true.

JPM estimate they burned £270m of cash this year so far. McL management said last week on the FY19 earnings call they need more cash by mid year. They say they have credible options on the table but clearly a deal not done yet.

So they don’t have 300m to get them through C19. They need more cash otherwise there will be trouble. Apparently there will be an update on 21 May in 1Q20 earnings call.

I hope and expect it will all work out but there is a lot of uncertainty and their bonds have 17-27% yields, or they did last week.

Desert Dragon

741 posts

38 months

Monday 27th April
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Pesky facts!

ralphrj

2,968 posts

145 months

Tuesday 5th May
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According to the Companies House filings, the £300m cash injection was in the form of preference shares.

The preference shareholder is entitled to an annual dividend of 15%!

Taffy66

3,653 posts

56 months

Tuesday 5th May
quotequote all
ralphrj said:
According to the Companies House filings, the £300m cash injection was in the form of preference shares.

The preference shareholder is entitled to an annual dividend of 15%!
Sounds like glorified loan sharks..!

Ferruccio

1,137 posts

73 months

Tuesday 5th May
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That’s the price for what is effectively distressed debt.

Desert Dragon

741 posts

38 months

Tuesday 5th May
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A) You can only pay a dividend with distributable reserves?

B) Off the cuff I'd say that whole deal is punitive hence a court could declare null and void. 15% on £300m?

Never heard of anything like it most would be delighted with 5% per year. 15% usery

Ferruccio

1,137 posts

73 months

Tuesday 5th May
quotequote all
Desert Dragon said:
A) You can only pay a dividend with distributable reserves?

B) Off the cuff I'd say that whole deal is punitive hence a court could declare null and void. 15% on £300m?

Never heard of anything like it most would be delighted with 5% per year. 15% usery
B) No - a court would not look into a deal like this. The parties involved are not retail customers.

That is the sort of yield that distressed debt funds where looking for before CV.

ralphrj

2,968 posts

145 months

Tuesday 5th May
quotequote all
Ferruccio said:
Desert Dragon said:
A) You can only pay a dividend with distributable reserves?

B) Off the cuff I'd say that whole deal is punitive hence a court could declare null and void. 15% on £300m?

Never heard of anything like it most would be delighted with 5% per year. 15% usery
B) No - a court would not look into a deal like this. The parties involved are not retail customers.

That is the sort of yield that distressed debt funds where looking for before CV.
In addition, I suspect that the holder of the preference shares is the holder of the majority of the ordinary shares, the Bahrain investment fund.

I think that the markets are anticipating that McLaren are going to request a haircut on their debt. The last trade on their bonds was for 66p in the £.

Mubea Carbo Tech in Austria (makers of the carbon tubs) have secured a charge over a number of pieces of McLaren-owned plant in their possession in case of a default on payment. They also secured a charge on a number of cars in McLaren's possession including 2 P14 coupes, 1 P14 spider (720S?) and 6 P22 GTs (the new GT?).

Ferruccio

1,137 posts

73 months

Tuesday 5th May
quotequote all
ralphrj said:
Ferruccio said:
Desert Dragon said:
A) You can only pay a dividend with distributable reserves?

B) Off the cuff I'd say that whole deal is punitive hence a court could declare null and void. 15% on £300m?

Never heard of anything like it most would be delighted with 5% per year. 15% usery
B) No - a court would not look into a deal like this. The parties involved are not retail customers.

That is the sort of yield that distressed debt funds where looking for before CV.
In addition, I suspect that the holder of the preference shares is the holder of the majority of the ordinary shares, the Bahrain investment fund.

I think that the markets are anticipating that McLaren are going to request a haircut on their debt. The last trade on their bonds was for 66p in the £.

Mubea Carbo Tech in Austria (makers of the carbon tubs) have secured a charge over a number of pieces of McLaren-owned plant in their possession in case of a default on payment. They also secured a charge on a number of cars in McLaren's possession including 2 P14 coupes, 1 P14 spider (720S?) and 6 P22 GTs (the new GT?).
Thanks - that’s a fascinating insight into the reality of what’s going on.

AndrewD

7,067 posts

238 months

Wednesday 6th May
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Why the excitement about 15%?

As I already said in post #2, McL debt is already trading around or above 20% yield.

Desert Dragon

741 posts

38 months

Wednesday 6th May
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Blimey distressed debt most were yields of 12% unless complete basket case of a company. I'm long retired so over decade ago. Horrible.

andrew

8,994 posts

146 months

jhoneyball

1,496 posts

230 months

Thursday 7th May
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And no access to £150m from uk government, according to sky news just now

hunter 66

3,088 posts

174 months

Thursday 7th May
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Brits cannot make cars anyway Mcl and AM , lets stick to the banking/property and get the Germans and Italians to make the cars.

Taffy66

3,653 posts

56 months

Thursday 7th May
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hunter 66 said:
Brits cannot make cars anyway Mcl and AM , lets stick to the banking/property and get the Germans and Italians to make the cars.
UK still own the small lightweight sports cars industry and no other country can compete...Morgan,Caterham,Ariel,BAC,Xenos,Radical,Lotus,Ginetta and Ultima..Its only when they start to get big it seems to fall apart even back to the good old British Leyland days..

Caporky

21 posts

88 months

Friday 8th May
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We do already build the fastest & most technologically advanced cars in the world. Why does AMG Mercedes HQ in the UK rather than Germany because apart from our politicians we are totally on our A game.

Ok so the panel gaps need some improvement in the Mclarens but it’s only been going 10 years and the product is still very good it should be cheaper than a Ferrari though....We do high end extremely well.

If you look at the jump in price when the 458 came out vs the 430 you can see the issue that all these manufacturers have. There’s way too much choice in the £200k bracket and a smaller market . Now the engines are becoming less exciting there won’t be the last of manuals, natural aspiration or v8/v12 just a gradual tilt toward electrification so you need to accept you are going to loose a lot of money on something modern which doesn’t interest me personally you’ve got to go older and hope the emissions don’t tighten, have an elecy for your everyday.

Kyodo

634 posts

78 months

Friday 8th May
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hunter 66 said:
Brits cannot make cars anyway Mcl and AM , lets stick to the banking/property and get the Germans and Italians to make the cars.
Ahem, erm... and the Formula One industry...?

What we don't do well is run union-infested (rightly or wrongly aside) production lines. History has taught us that!

12pack

1,034 posts

122 months

Friday 8th May
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Taffy66 said:
UK still own the small lightweight sports cars industry and no other country can compete...Morgan,Caterham,Ariel,BAC,Xenos,Radical,Lotus,Ginetta and Ultima..Its only when they start to get big it seems to fall apart even back to the good old British Leyland days..
Yes UK are tops in light weight, but also suspension tuning. The Germans basically achieve sporting performance with stiff suspensions, and the Italians are just too twitchy.

Juno

4,239 posts

203 months

Friday 15th May
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Looks like they might have a route to further cash required

https://www.autosport.com/f1/news/149439/mclaren-c...