McLaren taking legal action to secure "urgent" new funds

The McLaren Group has launched legal action to allow it to secure new funds it needs to prevent it from having to sell a stake in its Formula 1 team.

The BBC has reported McLaren is seeking “urgent” refinancing to combat “severe and unexpected financial difficulty” caused by the coronavirus crisis.

McLaren has been seeking to raise additional funding after seeing its road car sales plummet, while it faces a severe loss in revenue from F1 due to the opening 10 races being called off because of the COVID-19 pandemic.

As part of its efforts to raise funds, the Surrey-based automotive group attempted to secure a loan against its historic F1 car and McLaren Technology Centre in Woking.

But the move to raise up to £275 million was blocked by a group of investors that claimed a bond from 2017 has already secured the assets, meaning further loans against them is not possible.

McLaren’s shareholders injected £291 million into the carmaker in March in a direct response to the coronavirus pandemic, but this has already been spent.

An expedited hearing to determine whether its proposed refinancing can go ahead is due to take place next week in London.

In the court documents, McLaren says: “The scale and impact of the pandemic quickly became apparent to the senior management of the (McLaren) group.

"The pandemic has had a massive and detrimental effect on the group's trading performance.

"The start of the F1 season has been delayed. Car dealerships have temporarily closed; supplies have been interrupted; manufacturing has been suspended or impeded; customer orders have declined; sponsorship revenues have fallen and additional costs have arisen from health and safety measures.”

The McLaren Group recorded a £175 million drop in revenue through the first quarter of 2020 and last month it announced plans to cut staffing levels, with the racing team expected to trimmed by 70.