- McLaren has had to cut a quarter of its workforce, but now its risk of bankruptcy appears to be receding with help from a Bahrain bank’s major investment.
- McLaren CEO Mike Flewitt has previously said the hypercar maker could be delayed by two years in its product momentum while it deals with financial challenges, although the 765LT (above) and the Elva are still on track.
- The company had earlier attempted to raise money from a bond issue that’s secured against McLaren’s heritage car collection and its headquarters.
Britain’s luxury-car makers have been facing an existential crisis since COVID-19 struck, suspending production and seeing demand for their products falling around the world. Aston Martin has lost its CEO and announced last week it would be selling more shares as it attempts to stay in business. But McLaren seemed to be facing an even tougher challenge, first laying off 1200 employees and then entering a court battle with holders of existing bonds that, if lost, could have bankrupted it.
The legal argument is still ongoing, and it is over whether McLaren can raise more debt against assets including its high-tech factory in Woking, England, and itscollection of historic Formula 1 cars. Holders of a previous bond issued in 2017 claim that these are already employed as security against this earlier debt. In papers filed with the English courts, McLaren said a credit line that is the equivalent of almost $160 million has been fully utilized and the company would face a potentially catastrophic liquidity shortfall if the decision went against it. The company has been suffering on multiple fronts since the beginning of the COVID-19 pandemic, both shutting down road-car production and through the suspension of the start of this year’s Formula 1 season.
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Now, regardless of the outcome of the court case, McLaren seems to have secured its short-term future. Over the weekend, McLaren Formula 1 team principal Zak Brown told Germany’s Auto Motor und Sport that “the problems have been solved. You will hear positive news from us in the next few days.” This morning the National Bank of Bahrain has confirmed that it is offering McLaren about $184 million “financing facility” to help it through what it hopes will be the tail end of the crisis.
This makes sense since Bahrain’s Sovereign Wealth fund owns a majority stake in McLaren and also 44 percent of the bank. McLaren should also see some much-needed revenue from the long-delayed start to the Formula 1 season next weekend, and with limited production of road cars set to resume this week. Insiders say that demand for the forthcoming 765LT (pictured above) that was announced earlier this year has been strong, especially in the U.S., and that the company remains on course to launch the first model to sit on its new second-generation platform next year.
The COVID crisis has shown just how quickly the balance sheets of even apparently robust automakers can turn blood red, but it looks as if McLaren now at least has breathing space beyond the outcome of its legal battle.
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Source: Motor - aranddriver.com
