Williams Grand Prix Holdings agrees for the sale of a majority stake in Williams Advanced Engineering to EMK Capital.
Posted by: ihme (IP Logged)
Date: 24 December, 2019 18:55


Re: Williams Grand Prix Holdings agrees for the sale of a majority stake in Williams Advanced Engineering to EMK Capital.
Posted by: Stuart L (IP Logged)
Date: 24 December, 2019 22:32

Well thatís the capital injection into the Williams holding company to cover enough of this years F1 losses to maintain bank support and get through 2020.

Good News is say, it fills some of the cracks and gives everyone encouragement the business is capitalised and liquid to continue.

Just in time for the year end...will allow Williams not to post an 8 figure loss for the year if this exceptional item is included.

Re: Williams Grand Prix Holdings agrees for the sale of a majority stake in Williams Advanced Engineering to EMK Capital.
Posted by: Mehryar (IP Logged)
Date: 24 December, 2019 22:55

When you hear Camilleri talking about significantly more expensive season ahead, when they were already one if the biggest spenders, you would wonder where that will put us as a team with high hopes for 2021.

Ferrari, Mercedes, Renault and Redbull all have strong backing.Stroll can always inject money into Racing Point, and is doing so with the new factory.Mclaren is a car seller at the end and we are left with some minor teams like Haas to get through this expensive year.

Hopefully the money will be direct into the racing team, though I have no idea how the share holders were involved before selling these stakes.



http://img150.imageshack.us/img150/1095/mehryarsigyo7.gif

Re: Williams Grand Prix Holdings agrees for the sale of a majority stake in Williams Advanced Engineering to EMK Capital.
Posted by: Andrew Hooper (IP Logged)
Date: 25 December, 2019 00:54

But I do worry when businesses start to sell off their assets. At some point you will have nothing left to sell and what do you do then.

But if it gets them over the next year and allows for a better funded preparation for 2021 I suppose it is simply a step that has to be done.

Re: Williams Grand Prix Holdings agrees for the sale of a majority stake in Williams Advanced Engineering to EMK Capital.
Posted by: IanSmithISA (IP Logged)
Date: 25 December, 2019 09:25

Good morning,

Having been ranting on about WAE consuming too much of Williams' resources over the last few years I should be pleased by the partial sale, but I am not. :-(

Hopefully the money will be direct into the racing team, though I have no idea how the share holders were involved before selling these stakes.
Probably not at all, Sir Frank owns More than 50% but less than 75% of WGPH and WGPH own 75% or more of WGPE and WPGE own 75% or more of WAE.

But I do worry when businesses start to sell off their assets. At some point you will have nothing left to sell and what do you do then.
True, but they have been doing this for a few years now, starting with the £9m land sale and another sale of something has been something that I have prattling on about for a while as it is necessary because of the current debt levels.

Why I am not over the moon is this from the EMK Capital web site We typically make majority investments over periods of three to seven years.

The typical model of this sort of investor is that over the next few years they would take on significant debts and then sell on to a collection of commercial investors who would take only tiny chunks at over inflated prices.

Look at Aston Martin, floated at around £1,700p with around £600 million of debt in Oct 2018, in Sept 2019 they raised another £120 million of debt at 12% pa, yes 12% was the best that they could get. This is against revenue of about £1.2 billion.

The plan is that the new SUV, the DBX will be a great success and turnover will double. :-)

Currently AML shares trade at around 550p

What the WAE sales could easily mean is that within a few years WGPE will be the effective major shareholder in a company burdened with debt. Although a minor shareholder in absolute terms they will have so much more to lose than any other share holder they will be obligated to fix any issues or wind the company up/give it to the creditors.

A sale of the whole of WAE would have made me more optimistic for the future, instead I wouldn't be at all surprised to see WAE placing unacceptable loads on WGPE both in terms of personnel and commitments to hardware that would be shared by both WAE and WGPE.

By hardware I mean "Oh lets build a new wind tunnel and put it on WGPE books", this would give WAE access to a state of the art wind tunnel with minimal liabilities.

A while back the accounting regulators got worried by companies signing leases with long term liabilities but the accounting standards allowing only the costs incurred in the current year to be shown. The rules were changed to show the whole cost of the lease as a liability this was offset by the value of the leased item being shown as an asset.

The new standards were called IFRS 16 if you want to look them up.

IF WAE were to borrow the money for this hypothetical wind tunnel the finance costs must appear as a WAE liability/asset, If WGPE buy it and hire it to WAE then only the hire fee is cost to WAE and there is no liability for the long term finance.

If you were buying a company that you planned to sell reducing long term liabilities is very attractive. :-)

Ah but, If EMK can sell their shares in a few years time at an inflated price, then so can Williams.

Probably not, unless WAE can grow to a size and reputation that means its association with WGPE is irrelevant WGPE probably can not sell their shares because WAE is massively devalued without WGPE involvement.

This will help in the short term but would you bet on Willams' management being able to stop a specialised investment firm from prioritising WAE growth at the expense of WGPE? :-(

This is a list of current investments [www.emkcapital.com]

Bye

Ian



Edited 1 time(s). Last edit at 25/12/2019 09:26 by IanSmithISA.

Re: Williams Grand Prix Holdings agrees for the sale of a majority stake in Williams Advanced Engineering to EMK Capital.
Posted by: j-s (IP Logged)
Date: 27 December, 2019 17:12

Good post, Ian. I'm not enthused by this either. Just another type of a one-time payment used to prop the financial statements.

As a fan with very limited knowledge of M&As, to me WAE's success was just a nice thing to read about while the racing team was/is unsuccessful on track an in the books.

So they sell majority stake. Shares change hands. WAE continues to do what they do. Racing team continues to struggle.

Re: Williams Grand Prix Holdings agrees for the sale of a majority stake in Williams Advanced Engineering to EMK Capital.
Posted by: Francesc (IP Logged)
Date: 27 December, 2019 19:16

[www.racefans.net]

So Williams posted a loss of $25m this season. That's a huge hole. BTW, Unilever (Rexona) are defo leaving.

Re: Williams Grand Prix Holdings agrees for the sale of a majority stake in Williams Advanced Engineering to EMK Capital.
Posted by: IanSmithISA (IP Logged)
Date: 28 December, 2019 08:37

Good morning,

Quote:
Francesc
https://www.racefans.net/2019/12/27/the-cost-of-f1-2019-team-budgets-analysed-part-one/
So Williams posted a loss of $25m this season. That's a huge hole. .......

I suspect that this is speculative and based on typical expenditure patterns as Williams' end of year accounts have not yet been published.

If you look at the thread [www.f1network.net] created when the 2019 half year results were published I was guesstimating a £14m loss which would be around $18m.

Given that these are predictions and both numbers are pretty close it is not much of a surprise. :-)

Bye

Ian

Re: Williams Grand Prix Holdings agrees for the sale of a majority stake in Williams Advanced Engineering to EMK Capital.
Posted by: Francesc (IP Logged)
Date: 28 December, 2019 09:51

Could be that at half season results Paddy Lowe's severance payments weren't included? That would explain the sudden increase of debt.

Re: Williams Grand Prix Holdings agrees for the sale of a majority stake in Williams Advanced Engineering to EMK Capital.
Posted by: Myvatn (IP Logged)
Date: 30 December, 2019 09:29

Quote:
Francesc
https://www.racefans.net/2019/12/27/the-cost-of-f1-2019-team-budgets-analysed-part-one/
So Williams posted a loss of $25m this season. That's a huge hole. BTW, Unilever (Rexona) are defo leaving.
I don't think the situation is so bad on the sponsorship side. The value of the contracts is unknown, but it could well be that an eventual Rexona departure is covered by RokIt Drinks and Orlen by the increased presence of Latifi sponsors.

Re: Williams Grand Prix Holdings agrees for the sale of a majority stake in Williams Advanced Engineering to EMK Capital.
Posted by: Mehryar (IP Logged)
Date: 30 December, 2019 10:06

Quote:
Myvatn
Quote:
Francesc
https://www.racefans.net/2019/12/27/the-cost-of-f1-2019-team-budgets-analysed-part-one/
So Williams posted a loss of $25m this season. That's a huge hole. BTW, Unilever (Rexona) are defo leaving.
I don't think the situation is so bad on the sponsorship side. The value of the contracts is unknown, but it could well be that an eventual Rexona departure is covered by RokIt Drinks and Orlen by the increased presence of Latifi sponsors.

And if all are replaced by the new sponsors we will have the lowest budget once again! This season it's said we had the smallest.It doesn't help specially for the most expensive season for a long time.We need alot more money to be hopeful of 2021 turnaround.



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Re: Williams Grand Prix Holdings agrees for the sale of a majority stake in Williams Advanced Engineering to EMK Capital.
Posted by: Myvatn (IP Logged)
Date: 30 December, 2019 10:38

Quote:
Mehryar
Quote:
Myvatn
Quote:
Francesc
https://www.racefans.net/2019/12/27/the-cost-of-f1-2019-team-budgets-analysed-part-one/
So Williams posted a loss of $25m this season. That's a huge hole. BTW, Unilever (Rexona) are defo leaving.
I don't think the situation is so bad on the sponsorship side. The value of the contracts is unknown, but it could well be that an eventual Rexona departure is covered by RokIt Drinks and Orlen by the increased presence of Latifi sponsors.

And if all are replaced by the new sponsors we will have the lowest budget once again! This season it's said we had the smallest.It doesn't help specially for the most expensive season for a long time.We need alot more money to be hopeful of 2021 turnaround.
I would also put a big question mark on whether all other teams will keep the current level of expenditure. Will Gene Haas continue pumping money in his team to see it finish second to last? Will Alfa keep on sponsoring Sauber, now that Marchionne is gone and FCA is facing some though times ahead? How much is Lawrence Stroll really willing to spend on Racing Point? How will Renault justify further investments if results continue to be so poor?

I wouldn't be surprised if these teams actually reduce their spending for 2020.

Re: Williams Grand Prix Holdings agrees for the sale of a majority stake in Williams Advanced Engineering to EMK Capital.
Posted by: Mehryar (IP Logged)
Date: 30 December, 2019 11:49

But the signs are different.
Lawrence is investing alot in the team, they are working on a new factory, why should they stop raising the budget when doing such things?

If Williams looks at 2021 as their best chance of a turnaround, there's no reason to think Haas, Alfa and Renault think differently.



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Re: Williams Grand Prix Holdings agrees for the sale of a majority stake in Williams Advanced Engineering to EMK Capital.
Posted by: Myvatn (IP Logged)
Date: 30 December, 2019 12:39

Quote:
Mehryar
But the signs are different.
Lawrence is investing alot in the team, they are working on a new factory, why should they stop raising the budget when doing such things?

If Williams looks at 2021 as their best chance of a turnaround, there's no reason to think Haas, Alfa and Renault think differently.
Of course all teams will look at 2021 as a chance to improve their position.

But as in 2014, one cannot take it for granted that all teams (Williams included) will be in a position to do so.

Re: Williams Grand Prix Holdings agrees for the sale of a majority stake in Williams Advanced Engineering to EMK Capital.
Posted by: j-s (IP Logged)
Date: 30 December, 2019 21:00

It's always bad having a small budget. Having a small budget for 2020 and 2021 is real bad considering new regs and all of that. Effects will be felt for years, I fear.

Are Williams officially a racing boutique now, in F1 terms? A curio?

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