LONDON — McLaren will sell their state-of-the-art Formula One headquarters and lease it back long-term to raise cash and reduce the company’s debt, the team’s chief executive Zak Brown said.
Brown told reporters on Saturday in a Zoom call ahead of the Tuscan Grand Prix at Mugello, Italy, that it was a straightforward financial exercise.
“Why have all this money tied up in real estate? We’re not a real estate company, we’re a racing team and an automotive company,” he said of the Norman Foster-designed McLaren Technology Centre in Woking, England.
“We’ve got a lot of cash tied up in that building and that’s not a very productive use of funds when you’re looking to invest in your business,” he said.
The McLaren Group appointed former Diageo boss Paul Walsh as executive chairman in March, when existing shareholders raised 300 million pounds ($383.79 million) of additional equity, to oversee a financial restructuring.
The sports-car maker has been hard hit by the COVID-19 pandemic, with sales plunging and production halted earlier in the year. The group also secured a 150 million pound financing facility from the National Bank of Bahrain in June.
“We have a good chunk of debt and now Paul is starting to set a direction and take decisions to give us a stronger balance sheet, invest in the right areas, to ultimately grow our companies and be financially a much stronger company,” Brown said.
McLaren, third in the F1 championship after eight races, were “fine financially from a cash-flow standpoint,” he added.
“When COVID hit and that turned off our Formula One business, our automotive business and to a certain extent our technology business, that consumed an immediate amount of cash that we needed to call,” he explained.
“We’ve now done that and we’ve got plenty of runway to be able to make sound business decisions.”
Brown said the company was braced for some further COVID impact in 2021 but not at the level of this year and were well prepared for it.