More on the Lotus situation
September 1, 2015 by Joe Saward
More details are emerging about the Lotus F1 team situation, with further media pressure being added to the mix, presumably in an effort to get the current owners to agree to sell the business. I am told by several people who know these things that Lotus has yet to receive an actual offer from Renault, but the terms that will be offered have been leaked in the media, one presumes that this is designed to quieten any political questions that might be raised by Renault buying the team, given that the company is controlled by the French government (which has the right to block any big decision) and this does not want to be seen to be throwing money into such things when it has plenty of other problems to deal with. The government needs all the money it can get because it is in the process of offering tax breaks to businesses and to the French middle classes, in an effort to improve the economy (and to get re-elected).
There is a report in The Times today quoting Bernie Ecclestone, saying that he paid the salaries of the team last month. Making this public is clearly not something that Ecclestone would usually do (he loans money to teams on a fairly regularly basis), so there is clearly a desire to use the media to move things along rapidly.
At the same time I have been sent a document that indicates that Her Majesty’s Revenue and Customs (HMRC) has an administration hearing scheduled for September 9 (the Wednesday after Monza). This documents lists a large number of debts that the team has collected and asks for the team to be administered by Geoffrey Carton-Kelly and Geoff Rowley of FRP Advisory, the company that recently oversaw the Marussia F1 Team administration. HMRC has also asked that the court dismiss three pending winding-up orders, arguing that liquidation would destroy the value in the company as it would constitute what is known as “a cessation event”, as detailed in the secret commercial agreements that exist between the teams, the Formula One group and the FIA. That would mean the team’s entry would disappear and the creditors would only get what value could be derived from selling off the remaining assets. The primary asset is the entry.
The pressure is clearly on for the current owners but it is not clear why, that being the case, the Renault offer has not been made. One must assume that the French company is now waiting for an administration order and will then swoop in and try to do a quick deal with the parties involved. This would mean that most of the small creditors would get their money (or at least a percentage of it), but the big losers would be the owners, who have loaned the team money, or who own the shares. Obviously the situation can be resolved if there is an injection of cash into the team from the current owner, or from a buyer. What is clear is that the team is worth more than the money that is on offer for it, as long as it remains solvent. Logically, this should mean that those with the ambition to own an F1 team would be queueing up to make offers. The problem, as always, is not so much the purchase price, but rather the costs involved in running the team on a monthly basis, as this costs several million to be available every month. The bigger the company buying the team, the better the situation is, which is presumably why there has been so much press about Renault.
Another reason that Ecclestone is keen to have Renault take over the team is that this would mean that the French company would put its own engines in the Enstone cars and that would free up a supply of Mercedes engines. Red Bull is talking about leaving F1 if it cannot find a competitive engine and obviously the best choice would for them would be Mercedes, although it is hard to see why this makes sense to Mercedes, which would prefer to go on winning with its own factory team.