Russian chemical giant, Uralkali has claimed that the Force India team’s administrators did not act in its best interests. Especially when handling the sale of the team, which was agreed earlier this month.
On August 7th, the FRP Advisory announced a consortium led by Lawrence Stroll, father of F1 driver Lance Stroll. This consortium would rescue the Silverstone-based team from administration.
However, according to a statement by Dmitry Mazepin, “the process conducted by the administrator of Force India Formula One Team Limited may not be in the best interests of Force India creditors and stakeholders, and the sport in general.”
Uralkali had even submitted two proposals to administrators to save the team. Both “proposed sufficient funding to satisfy claims of all creditors in full and included an undertaking to provide significant working capital and new investment program over a 5-year term.”
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One of the proposals was to purchase the team as a going concern. However, following discussions with shareholders Uralkali concluded the team could not be purchased. There was a going concern due to the Indian government’s freeze on assets belonging to former co-owner Vijay Mallya.
There were convoluted legal processes followed in India regarding Mallya’s legal predicaments. So, no consent was received from the 13 Indian creditor banks who applied for freezing orders on Mallya’s assets banks. Therefore the sale of Force India by administrators FRP Advisory LLP was impossible.
Thus the announced acquisition of Force India by the Stroll consortium was reduced to an asset-only sale, and the team becomes a new entity. Under F1’s commercial agreements, teams forfeit their right to a share of F1’s revenues in the event of any change in legal status. Force India’s share of the sport’s 2018 revenues, based on its fourth place in the 2017 classification, amount to an estimated £52,4m, paid in 10 tranches.
This is thought to a major blow to the consortium, which had factored the retention of the team’s shares revenues into its purchase offer. Any deviation requires the approval of all teams, with at least three said to have refused the concession.
Uralkali also made an offer to purchase the team’s assets. Additionally the submitted a development plan for the team and “offered to assume a number of what appeared to be questionable last-minute claims against Force India communicated to Uralkali in the hours before the deadline for submission of the final bid.”
However the Uralkali bid was rejected. “Following the submission of our proposal, the administrator refused to engage with Uralkali team, did not reply to phone calls and emails and communicated with Uralkali in a single email following close of business on August 7, 2018 that it had entered into an exclusivity arrangement with another bidder regarding a proposal to rescue the company,” it said.
The company also claims its demand for a “transparent and fair process to ensure equal opportunities for each bidder” was not respected. A proposal by Uralkali for bids to be submitted in sealed envelopes and opened in front of representatives from each bidder was rejected by the administrators.