Secret $ 25 million funding for Supercars buyout

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A pitch to wealthy investors raised around $ 25 million to help fund the deal.

The issuance of shares in the new Supercars ownership group is expected to be fully subscribed.

The unpublished private offer replaced an earlier effort to raise $ 55 million to fund the buyout.

The original prospectus was published on or about September 10 before the stake was revised down at the end of last month.

It appears that a mysterious private partner is funding all or most of the difference to take control of the Supercars.

Global sports marketing agency TLA and national racing promoter Australian Racing Group are set to purchase Supercars as part of a joint venture.

TLA and ARG formed a new company called RACE – Racing Australia Consolidated Enterprises – to complete the acquisition.

The sale of Supercars to RACE is expected to be finalized this week.

Private foreign investment provides most of the financing in a partial IPO before the sale.

Under the new owner, the Supercars will be run by a powerful board of directors, perhaps chaired by retired Triple Eight team boss – and longtime V8 broker – Roland Dane.

The RACE consortium will bring together all of the major Australian motor racing categories under one ownership and management group.

RACE purchases V8 racing from private equity firm Archer Capital and the teams, taking full control of the sport.

Archer owns around 60%, with up to 5% command held by individuals, while teams have the remaining 35%.

Nick Percat, Brad Jones Racing

Photo by: Edge Photographics

The RACE buyout is valued at $ 100.3million (US $ 75million / £ 54.3million), although it will only pay around $ 60million (US $ 44.9million). / £ 32.5 million) in advance.

Private shareholders will contribute around $ 25million (US $ 18.7million / £ 13.5million), with a major and mysterious partner funding all or most of the rest.

In addition to the majority stake in Archer, RACE will assume the entire shareholding of the teams by paying them over five years with a guaranteed annual income.

Each entry must receive at least $ 650,000 (US $ 486,500 / £ 352,400) per year, plus an agreement for an ongoing share of the annual profits.

Teams will also receive a one-time grant of $ 450,000 (US $ 336,700 / £ 244,000) per car to help fund the switch to new cost-controlled Gen3 Chevrolet Camaro and Ford Mustang race cars, now delayed until 2023. .

The direct grant replaces Supercars’ previous offer of a loan at a high annual interest rate of 10 percent to help teams make the switch.

Archer Capital, which is closing its investment portfolios by year-end, bought control of Supercars in 2011 for $ 190 million, valuing the total business at over $ 300 million.

While at nearly $ 60 million, Archer appears to be selling his stake at a loss, he has raked in annual profits over the past decade with no additional investment.

Pre-coronavirus, he would have made annual profits of around $ 20 million.

COVID lockdowns have brought races to a halt again this year, but the series is on course to make money if it completes the remaining five events, culminating with the Bathurst 1000 delayed in early December.

The Supercars teams, who own 35% of it, accepted the TLA / ARG offer, swapping their stake for increased guaranteed income for every entry over the next five years.

Under their current agreement, Supercar teams receive over 60% of annual distributed profits, worth approximately $ 450,000 per entry.

The disproportionate dividend was negotiated by former Supercars boss James Warburton, now head of Seven Network, V8 Racing’s free-to-air TV partner, in a deal that saved several teams on the edge. of financial collapse.

The original Supercars private investment prospectus was released over a month ago, looking for $ 55 million.

According to financial experts, this would have almost fully funded the $ 50 million RACE takeover, with a reserve of $ 5 million for initial operating expenses.

The first prospectus, full of glowing approvals of Supercars’ future growth potential, valued the overall deal at $ 100.3 million – what’s known in corporate buyouts as the “total value of the car. ‘business”.

He also pledged to retain the current management group, led by President and CEO Sean Seamer.

Cameron Waters, Tickford Ford

Cameron Waters, Tickford Ford

Photo by: Edge Photographics

A revalued prospectus raised the private investment target to around $ 25 million, which informed sources said was fully subscribed.

A mix of institutional investors and racing identities are said to have signed on to RACE’s purchase of Supercars.

At least one large corporate identity with major sports ties would have invested.

The proposed board was initially TLA Super Chief Barclay Nettlefold, former IMG executive and Supercars co-founder Martin Jolly, V8 legend Mark Skaife, sports marketing guru and former great Australian football. Craig Kelly, ARG CEO John McMellan, a representative of Henslow, a Melbourne-based international financial advisory firm, and a woman named.

Henslow issued and negotiated the sale of partially owned shares of RACE.

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It is understood that the last composition of the new board is different. ARG co-owner Barry Rogers, son of great Australian racer Garry, is also expected to secure a seat.

The Rogers have a controlling interest in ARG.

With the Porsche Carrera Cup and the Toyota 86 series supporting Supercars, the combine would encompass and distribute all major races in Australia.

The TLA / ARG consortium has won the exclusive rights to purchase Supercars following the rejection of a bid led by Boost Mobile maverick boss Peter Adderton.

He was backed by expatriate Australian BTCC boss Alan Gow, transport mogul Pete Smith, MotoGP legend Mick Doohan and wealthy rider Paul Morris.

Their offer was $ 30 million in cash and a $ 20 million loan to fund Archer’s takeover, along with annual distributions agreed to to the teams over five years to buy their stake.

The Adderton Group says the terms of its full control takeover offer have been revealed to TLA / ARG, which revised its final offer to become the preferred buyer.

Due to be sealed this week, the TLA / ARG offer is highly localized in addition to partial flotation.

This only affects TLA Worldwide’s local operations, as its US subsidiary TGI Sports withdrew its support early on.

Among the first RACE buyout agendas will be an in-depth review of Gen3, questioning the sweeping changes.

There are many concerns that the Gen3 design is flawed and ultimately still too expensive.

Supercars has so far funded the development of the next-generation Ford Mustangs and Chevrolet Camaros, which replace the ZB Commodore, and new production-based V8s, with help from Ford Performance and GM Performance in Detroit.

The introduction of the Gen3 race has been postponed from next year’s mid-season to 2023 due to COVID-related production delays and general concern about a mid-term change.


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