McLaren facing vital court hearing to help secure financial future

McLaren is facing a key court case on the eve of the season-opening Formula 1 grand prix in Austria as it seeks to secure its financial future.

McLaren Holdings Ltd is seeking what has been described by its lawyer, Tom Smith QC, as an "urgent" round of refinancing before July 17 when it is claimed it is set to face potential insolvency.

The company is looking for a judgment that security held over its classic car collection and Technology Centre headquarters in Woking can be released, enabling it to raise the vital funds required.

Smith has claimed that deals are in the pipeline that will allow the sale of the cars and a leaseback of the property.

The motion is being opposed by US Bank Trustees Ltd, one of McLaren's bondholders. It is contested the cars and site were already used as security in a bond launched in 2017, raising more than £650million. It is claimed the latest 'mortgage' attempt is unlawful.

In argument, Smith said: "This isn't a case where the claimant has delayed bringing this case to court. There is a real need of urgency here. All interests in the group … might suffer if the proceedings are not expedited."

After the initial case was heard remotely on Friday [June 19] by Judge Anthony Mann, a subsequent remote hearing in front of Mr Justice Zacharoli on Monday [June 22] ruled that the case can proceed on Thursday, July 2, just three days prior to the start of the new F1 season.

It is still hoped an amicable agreement can be reached prior to the court date.

The effects of the pandemic have had a serious effect on McLaren's overall business, notably an impact on car sales, whilst a delay to the F1 season has also hit revenues.

In March this year, McLaren shareholders injected £291m into the business it had been hoped would sustain the company, but it quickly became apparent additional funding is required.

Soon after, McLaren announced it was to cut 1,200 jobs from its 4,000-strong workforce.

Although around 70 of those are from the F1 side of the organisation, they are as a direct result of the imposition of the budget cap from 2021, which is to run at $145m for next year, a drop of $30m on the initially planned figure prior to the impact of Covid-19.

Before you go...

Formula 1 launches the #WeRaceAsOne initiative

Testing the 2018 car 'shows the progress F1 has made' - Ricciardo

Related

McLaren

Norris admits McLaren future DOUBTS

• Yesterday 10:58

F1 Superstars

McLaren wary of Norris and Piastri pursuing Senna-Prost rivalry

• November 20, 2024 11:59