Last week FIIG Securities was the sole lead arranger for the Racing Australia Consolidated Enterprises Ltd (“RACE”) issue of AUD$45m 6 year, 6.25% secured amortising notes.
The Notes were well received by investors who were attracted to the stable and predictable cash flows generated from long term media rights contracts and sponsorships, with the offer closing early and oversubscribed.
RACE is a new special purpose company, specifically established to acquire, operate and grow Supercars.
Supercars is one of Asia Pacific's most iconic motorsport and entertainment companies operating the Supercars Championship touring car competition with events across Australia and New Zealand. The Championship has a 52-year history and 20% of Australians consider themselves to be Supercars fans with 1.8m attending a typical race season. It is of the few sports that can boast a genuine fan base right across Australia and New Zealand. The venue map below outlines the sport’s broad reach.
The Supercars business owns all the franchise and intellectual property (IP) rights associated with Supercars as well as various exclusivity rights to run V8 events across Australia. These rights and IP provide high barriers to entry and essentially, RACE will benefit from a monopolistic position.
Supercars has three main operating divisions; Media, Sponsorships and Events. Supercars runs its own in-house media production business and while presented as a car racing organiser, Supercars should be considered as a media content provider that essentially creates content which it sells to media outlets on long term contracts.
The earnings of Supercars are underpinned by media rights (c.50% of EBITDA) and sponsorship, with the majority of events themselves run around break-even from a ticketing and hospitality perspective, but essential in providing the content.
Recently the business agreed a new 5 -year (2021-2025) media rights deal with Foxtel and Channel Seven and a new 5 year series sponsorship agreement with Repco. The large proportion of earnings aligned to these contracts has supported the business through the last two years since the pandemic materially severely impacted attendance levels, and yet earnings were not severely impacted.
RACE is a consortium of private investors, including leading members of the sport media and marketing industry (Barclay Nettlefold and Craig Kelly) as well as investors deeply rooted in Australian motorsports (Australian Racing Group and Mark Skaife).
Summary of the Notes
- Senior secured
- Pay a fixed 6.25% coupon paid quarterly
- 6-year term and mature in November 2027
- Material amortisation and a 34% bullet payable at maturity
- Financial covenants
This was a landmark transaction for FIIG and RACE and has allowed investors the opportunity to be part of a culturally ingrained sporting franchise and part of Australian history.
For enquiries about this and the other primary market opportunities that FIIG makes available to its clients please get in touch with your Relationship Manager.