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Posted on f1technical.net

by Snorked
Post 21 Jun 2020, 14:40
MCLAREN HOLDINGS LIMITED / U.S. BANK TRUSTEES LIMITED court document - https://pdfhost.io/v/JNNyCbaII_Microsof ... 24docx.pdf

McLaren need to raise £280m no later than July 17 2020 to be able to support continued operations going into 2021
If I may be pedantic, they don't need to raise the full £280m by the 17th. They need to raise some funding by the 17th in order to continue to pay their predictable bills, they expect to need a cumulative total of £280m by the end of the year, and they seek to raise the entire amount in one shot by either borrowing against their more chunky assets or doing a sale-leaseback on their real property (MTC and MPC).
 

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Discussion Starter #5
If I may be pedantic, they don't need to raise the full £280m by the 17th. They need to raise some funding by the 17th in order to continue to pay their predictable bills, they expect to need a cumulative total of £280m by the end of the year, and they seek to raise the entire amount in one shot by either borrowing against their more chunky assets or doing a sale-leaseback on their real property (MTC and MPC).
Yes. The headlines are more based upon the lawsuit information than realistic assessments of McLaren’s abilities to arrange operational financings. :)
 

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Well, here's the thing: Regardless of McLaren's financial position, default or bankruptcy is different than liquidation. Being in default or filing for restructuring can merely mean a change of ownership from shareholders to creditors/bondholders. It doesn't necessarily mean anything for operations.

The question is whether creditors see a viable business or not. You can either take over the business or you can try to sell what you can and recoup what you can.

I'm not sure how viable it is being an independent exotic manufacturer anymore other than Ferrari. Practically all independent "exotic" companies have either failed on their own or been acquired. That said, I could see McLaren being a great acquisition for BMW. BMW has no high-end cars and they already have a connection to McLaren and they are pushing for EVs, composites, etc.
 

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'The question is whether creditors see a viable business or not. You can either take over the business or you can try to sell what you can and recoup what you can.'

I am a full believer of that, and considering they are so deep in the crap already, this 'viable' business looks to be high risk, unless the new ceo can turn this company around. I was actually in the process of buying a 12c. Seeing this today, has literally made me fill a bucket, and thats not being sick either. I am fully inclined to back out which I am very upset about, but havent yet.

I believe this business can succeed but needs time and faith, I just hope that the investors see that. It needs a lot of money pumping in it to save, think about it, they need to stop production to increase the value of their cars which they are massively struggling with in terms of depreciation, can they afford to do that? No, they cant.
 

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Discussion Starter #8
McLaren was executing very well to a plan. They have/had a great product line up offering and great products in development. A well run company. The management team that gave us many of these wonderful sports cars is still in place. Then unexpectedly a pandemic. So now a regrouping. Money is cheap at this time (low rates) - think McLaren and current investors will find a way to raise the money. :)
 

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I'm not sure a good argument can be made that McLaren was a well run company - but that is a hotly debated topic.

Ultimately it will be up to the shareholders to decide if they feel the value of the company is worth more than the debt on the company. If they don't, then the debt holders will determine if they're losses will be greater by extending more credit or by liquidating. I assume that all parties would agree that at least funding to get to an orderly sale of the assets would be in everyone's benefit should it come to that.

Either way, I'm certainly not buying a McLaren right now -I stopped shopping for them a few months ago when it became clear that the company might not be able to support existing customers.
 

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I stopped shopping for them a few months ago when it became clear that the company might not be able to support existing customers.
Not sure where that is coming from. First concern I've heard regarding existing customer support. I've actually heard the opposite, and have had exemplary support from them before/during COVID.

Maybe Latifi or some other parent that wants their kiddo in an F1 car will pony up some serious cash. With Stroll's investment in Aston, I can't imagine McLaren would be viewed as a bad investment at the moment. People have the money to invest here, just hope Lando doesn't get the short end of the stick and pushed out so some billionaire's son can get an F1 drive.
 

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McLaren was executing very well to a plan. They have/had a great product line up offering and great products in development. A well run company. The management team that gave us many of these wonderful sports cars is still in place. Then unexpectedly a pandemic. So now a regrouping. Money is cheap at this time (low rates) - think McLaren and current investors will find a way to raise the money. :)
I think is far from a forgone conclusion that Mac will get the big money required to continue without Major changes to their operations. The counter argument to yours is that a better run company would have been more resilient to this pandemic.

I admire your positive outlook. However, I feel we will be seeing rather significant changes in strategy and/or management, coming out of this crunch. In short, they need big money (far bigger than the current shortfall) to continue as before. Remember, they need to cover operations plus new investments in R&D, against the backdrop of a slowing market. Big money doesn’t come without strings attached.

I think the concern for a current would-be buyer of a car is justified. I think history shows that well established brands do tend to carry on in some capacity. The question is, is McLaren established enough, yet. I have fingers crossed that McLaren will still be in business in 3 years and I am fairly confident they will be. But the car ownership experience from now until then could be volatile in many ways, depending on how things play out.


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Discussion Starter #15
I think is far from a forgone conclusion that Mac will get the big money required to continue without Major changes to their operations. The counter argument to yours is that a better run company would have been more resilient to this pandemic.

I admire your positive outlook. However, I feel we will be seeing rather significant changes in strategy and/or management, coming out of this crunch. In short, they need big money (far bigger than the current shortfall) to continue as before. Remember, they need to cover operations plus new investments in R&D, against the backdrop of a slowing market. Big money doesn’t come without strings attached.

I think the concern for a current would-be buyer of a car is justified. I think history shows that well established brands do tend to carry on in some capacity. The question is, is McLaren established enough, yet. I have fingers crossed that McLaren will still be in business in 3 years and I am fairly confident they will be. But the car ownership experience from now until then could be volatile in many ways, depending on how things play out.
Not sure what better run car manufacturer of similar size to McLaren that you might be thinking of - not Aston Martin I assume? McLaren management has done a very good job so far ... who better to make the ‘major’ changes as required? Perhaps even deciding what is best for McLaren when confronted with an unexpected pandemic .... ? ;)
 

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Not sure what better run car manufacturer of similar size to McLaren that you might be thinking of - not Aston Martin I assume? McLaren management has done a very good job so far ... who better to make the ‘major’ changes as required? Perhaps even deciding what is best for McLaren when confronted with an unexpected pandemic .... ? ;)
I'm just looking at it from the perspective of potential investors. If "money is cheap", as you say, AND McLaren is a well-run company with excellent prospects for the coming years, one would assume that there would be a line-up of investors willing to take advantage of the current opportunity.
 

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Discussion Starter #17
I'm just looking at it from the perspective of potential investors. If "money is cheap", as you say, AND McLaren is a well-run company with excellent prospects for the coming years, one would assume that there would be a line-up of investors willing to take advantage of the current opportunity.
Well not likely that there would be a ‘line-up’ of investors for the opportunity unless the current owners were willing to dilute their share holdings. At this time McLaren appears to be trying to obtain and service a loan at favorable terms to continue production and sales through the remainder of the year. There will of course be a reduction in unit sales this year and maybe some delay of new model introductions. We will see how it plays out .....
 

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Well not likely that there would be a ‘line-up’ of investors for the opportunity unless the current owners were willing to dilute their share holdings. At this time McLaren appears to be trying to obtain and service a loan at favorable terms to continue production and sales through the remainder of the year. There will of course be a reduction in unit sales this year and maybe some delay of new model introductions. We will see how it plays out .....
Well if they are trying to sell off part of the F1 team, they are willing to dilute in some manner, no?

I think favourable terms would have been a successful bid for govt help. A mortgage of the buildings/factory and heritage cars somewhat less so.

In any case, I can’t see how 2-300M loan while reducing sales is anything more than kicking the can down the road for a few months.


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Discussion Starter #19
SKYNEWS
McLaren in talks about Bahraini bank loan

A loan from the National Bank of Bahrain would deepen the Gulf state's interest in the supercar-maker, Sky News learns.

Mark Kleinman
City editor @MarkKleinmanSky
Wednesday 24 June 2020
arrives for/departs a visit to McLaren Automotive at McLaren Technology Centre on September 12, 2017 in Woking, England.

Image:McLaren is in detailed negotiations to borrow more than £150m
The British supercar-maker and Formula One (F1) team-owner McLaren Group is in talks to secure a loan from a major Gulf-based bank that would deliver a long-awaited boost to its coronavirus-hit finances.



Sky News has learnt that McLaren is in detailed negotiations to borrow more than £150m from the National Bank of Bahrain (NBB) as it races to shore up its balance sheet.

The company, which has been forced to lay off more than a quarter of its workforce since the pandemic struck, has been exploring a range of options to raise funds in recent months, including mortgaging its valuable heritage car collection and spectacular Surrey headquarters.
Sources said that an agreement between McLaren and the Bahraini lender remained far from certain.
The NBB is part-owned by Mumtalakat, Bahrain's sovereign wealth fund, which is also McLaren's largest shareholder - meaning that an agreement would strengthen the Gulf state's interest in one of the most prestigious names in British manufacturing.
A loan deal for the automotive group would not preclude it from continuing to pursue other options in the short-to-medium term, according to insiders.

Those would include borrowing against its existing assets such as cars driven by the likes of the F1 legend Ayrton Senna.
Sky News revealed last week that McLaren was also starting to examine the sale of a minority stake in its F1 team.
A general view of former McLaren racing cars at their centre in Woking, Surrey. 12/9/2017

Image:McLaren could also borrow against existing assets such as its vintage F1 cars
Capital could also be raised from existing bondholders, some of which have objected to the mortgage proposal because they argue they already hold security over it.
McLaren has gone to court to seek a ruling in favour of its ability to pursue that deal.
The McLaren name is among the most historic in the F1 paddock, and during more than half a century of competing has won eight F1 constructors' championships.
The team's drivers have included the likes of Mika Hakkinen, Lewis Hamilton and Alain Prost.
It has fallen on leaner times on the track during the last decade, although under its current racing boss, Zak Brown, its fortunes have begun to revive.
The stalled F1 season is due to get underway in Austria next month, with two Grands Prix scheduled to take place at Silverstone as part of the truncated campaign.
McLaren's on-track operations, which include its participation in the Indianapolis 500 race, account for roughly 20% of the group's annual revenues.
The team's drivers this year are Lando Norris and Carlos Sainz Jr.
It has struck sponsorship deals with companies including Darktrace, the cybersecurity software provider, and upgraded British American Tobacco to a "principal partnership" - despite the ban on tobacco advertising in the sport.
McLaren recorded a £133m loss in the first quarter of the year, as its F1 and road-car operations were hurt by the coronavirus pandemic.
Last month, it cut 1200 jobs across its operations as part of a restructuring plan affecting more than a quarter of its workforce.

McLaren's drive to access new funding has been accelerated in the wake of a request for a £150m loan from the government being rejected.
Sky News revealed in April that McLaren had approached the Department for Business, Energy and Industrial Strategy (BEIS) with the funding request after seeing sales of its supercars evaporate.
Orders are said to have rebounded strongly in recent weeks.
McLaren is a major British exporter, supporting thousands of jobs across the UK supply chain.
The talks about financing options comes not long after McLaren parachuted in Paul Walsh, the heavyweight former boss of Diageo, as executive chairman - a move that stoked speculation that McLaren's shareholders ultimately wanted to take the company public.
McLaren's road-car division, which was previously a semi-independent company called McLaren Automotive, makes some of the world's most expensive cars, with models including the Senna - named after its legendary former F1 driver, Ayrton Senna.
The unit, which is run by Mike Flewitt, represents the majority of the group's sales.
The British company saw its separate divisions reunited following the departure in 2017 of Ron Dennis, the veteran McLaren boss who had steered its F1 team through the most successful period in its history.
He became one of Britain's best-known businessmen, expanding McLaren's technology ventures into a wide range of other industries through lucrative commercial partnerships.
Mr Dennis offloaded his stake in a £275m deal following a bitter dispute with fellow shareholders.
He had presented to McLaren's board a £1.65bn takeover bid from a consortium of Chinese investors, but did not attract support for it from boardroom colleagues.
McLaren declined to comment.
 

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Seems to me a lot of balls in the air right now and hard to predict their future. Even Bahrain must be under some financial stress. As a car owner, I hope they are acquired by a large and stable manufacturer like BMW or Mercedes who can use their technology in other road cars, and who can and will improve Mac’s poor QA, QC and reliability. That said, hope is a poor strategy. Worse comes to worst, I’ll just dump my Mac and buy a Lamborghini or another Ferrari.
 
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