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McLaren seeks £250m to start British car maker

McLaren Group, manufacturer of the famous F1 sports car, is seeking £250m from new investors to turn its Automotive division into a new British car maker.

The radical restructuring will see the McLaren chairman Ron Dennis become executive chairman of the new company and cut all ties with the company's Formula One team.

Richard Lapthorne, the Cable & Wireless chairman, will become non-executive chairman of McLaren and a director in McLaren Automotive, which will produce a new high-performance road car.

The plans have serious implications for the UK car industry, where McLaren Automotive is likely to become a significant British-based car manufacturer, and Formula One.

Mr Dennis is leaving the sport after more than 40 years. His decision comes as McLaren faces an enquiry over allegations that the team's star driver and reigning world champion, Lewis Hamilton, misled stewards after the Malaysian Grand Prix.

The new sports car company is offering 49pc of the business to new investors, valuing it at just over £500m. The current shareholders are sovereign wealth fund Bahraini Mumtalakat with 50pc, watchmaker Tag Group, 25pc, and Mr Dennis, 15pc.

McLaren's major shareholder, Mercedes-Benz owner Daimler, has decided to play no part in McLaren Automotive.

A spokesman for McLaren said there are no plans to float the business, but it faces an uphill task to attract new equity amid the financial crisis and a dramatic slump in new car sales. Credit Suisse has been appointed as financial advisers.

"With planned additional investment in the company of £250m, proposals in place for a new McLaren car production facility in the UK, and the potential for up to 800 skilled jobs, McLaren Automotive's expansion will represent a significant investment in the UK automotive industry," Mr Dennis said

"I was the architect of today's restructure of the McLaren Group," he said in response to claims that a feud with Hamilton was forcing the proposals and the split from Formula One. "Again, no-one asked me to do it. It was my decision."The new car has been code-named the P11 and will be launched in 2011. It is likely to be worth around £100,000. "We believe the market will recover," Mr Dennis added, before explaining that the need for new equity was because his company has been built with a "complete aversion" to debt.

McLaren's previous cars include the F1, which ceased production in 1998 after five years. It was the world's fastest car at the time and was eventually followed by the Mercedes-Benz SLR McLaren, which will remain in production until 2009.

Tim Urquhart, an analyst at IHS Global Insight, said Mercedes-Benz and McLaren had endured creative differences over the production of the SLR, leading to a split in direction which is believed to be behind Daimler's decision to avoid a stake in McLaren Automotive.

"I think there was a difference in philosophies between what they want a sports car to be," Mr Urquhart said. McLaren will want the new car to be the "ultimate", he added, rivalling the top-end Ferrari F430 and the Lamborghini Gallardo.

"It's not the ideal time to be launching, but hopefully the market will be on an upward trajectory by then," he added. "I think when it does launch it should be a strong addition."

The new company will be a small, boutique car maker, he said.

The appoint of Mr Lapthorne will bring a City heavyweight into the company. He has held directorships at retailer New Look, car parts group TI Automotive and technology company Morse,

He said: "It's a rare opportunity to be involved at a key stage in the development of a British sports car company of an entirely new sort, especially one that has such a great racing pedigree and such a world-class reputation as McLaren."

McLaren seeks £250m to start British car maker - Telegraph
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