McLaren Automotive Ltd 's £370 million and $250 million senior secured notes due 2022 refinanced £238 million of bank debt and the company paid £200 million to buy out shares held by Ron Dennis

MAL is the car manufacturing business and accounted for 73% of the £898 
million combined revenues in 2016, with MTG encompassing the racing (about 
22%) and applied technologies business activities (about 5%). As part of the 
financing, a new parent holding company--McLaren Group Ltd.--has been 
established, which will bring all McLaren's business activities under a single 
ownership structure.

MAL has undertaken a multiyear program, since 2015, of significant product 
development and investment to release 15 all-new cars or derivatives, and 
gradually increase its annual production to 4,500 cars per year by 2022. We 
believe that the strong McLaren brand name, its established technological 
expertise and innovation, and its modular production platform will help 
execute this strategy, supported by strong customer demand. MAL has a good 
track record of new model development, which is already bearing fruit: car 
volumes doubled in 2016 compared with 2015. Volume growth--albeit not at the 
same pace--will need to continue to strengthen profitability and generate 
positive free cash flows to finance future spending on new models.

Car sales volumes of 1,186 were 8% lower year on year during the six months to 
June 30, 2017, due to lower supply levels, although about 3,600 are expected 
by the company in 2017 and more than 4,000 in 2018.

We view MTG's position as a racing car constructor in F1--which has 
historically been strong--as supportive of McLaren's technological 
development, visibility, and branding. However, in recent years MTG's F1 
racing performance on the track has been weak, hampered by underperforming 
engines currently supplied exclusively by Honda. In the current championship 
season, after 15 races McLaren is second to last in the constructor standings 
with only 23 points. Its key strategy is to improve this, but it will remain a 
challenge until it can regain its competitiveness on the track, against other 
leading constructors, notably Mercedes and Ferrari, who manufacture their own 
engines and have substantially larger resources. We note that McLaren will no 
longer use engines supplied by Honda after the current season. McLaren has 
entered into a new engine supply partnership with Renault for the 2018-2020 

F1 revenues come from prize money, sponsorship, and merchandise. Levels vary 
over time depending on the success of the F1 team, but are also largely 
contractual. Should on-track performance not improve, revenues will further 
decline, potentially compromising the brand and affecting the pricing power 
and demand for McLaren's high-performance cars. The racing business also has 
high costs and weak profitability, reporting losses in some years. MTG has a 
small applied technologies business, which transfers automotive-related 
innovation into wider markets such as transportation and health care.

McLaren's financial risk profile is constrained by its highly leveraged 
capital structure. The £370 million and $250 million senior secured notes due 
2022 refinanced £238 million of bank debt and the company paid £200 million to 
buy out shares held by Ron Dennis. The remaining amount covered transaction 
costs and added cash to the balance sheet. The shares acquisition was 
completed in July 2017. A further £75 million will be paid as a deferred 
consideration to Ron Dennis, with £37.5 million each in December 2017 and 
August 2019. The £90 million RCF was undrawn.