The coronavirus pandemic has had a massive financial impact on the world, and F1 is also affected. Recently, the McLaren company applied for a £150m loan to keep itself afloat. Unfortunately for them, the British government denied the request.
As per Sky News, the Department for Business, Energy and Industrial Strategy (BEIS) rejected the McLaren automotive group funding plea.
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The British manufacturer contacted ministers in order to seek a commercial loan. This comes amid ongoing talks between the government and several big companies, including Tata Steel and Virgin Atlantic.
McLaren witnessed supercar sales plummet overnight, owing to the COVID-19 crisis. Meanwhile, the company’s F1 branch is waiting for the Grand Prix season to commence, especially after months of race postponements.
Paul Buddin, McLaren’s finance chief told investors, “We are looking at a number of very credible sources, and that includes all [those we] might be expected to ask, including government, including third parties.”
How bad is the McLaren situation?
The British automobile giants employ around 4,000 people. Luckily, the Coronavirus Job Retention Scheme furloughs most of the employees. Despite this, McLaren is seeking additional financing to secure its future, both as a manufacturer and as an F1 team.
Some believe that the the government did not believe that the manufacturer sufficiently exhaust alternative financial sources. In fact, JP Morgan bankers are also advising McLaren on the financing talks.
The discussions comes just weeks after McLaren appointed Paul Walsh as its chairman. Walsh, himself is stepping down as chairman of the FTSE 100 catering group Compass. He takes over chairmanship duties from Shaikh Mohammed Bin Essa Al Khalifa at McLaren.
His arrival has stoked speculation that McLaren’s principally Bahrain-based shareholders will eventually consider taking the company public – although such a move is unlikely for at least three years.
If any public listing does take place, McLaren’s investors are likely to pursue a valuation of well over £2bn.
