Racing Point paid £90 million for Force India acquisition

Racing Point paid £90 million to acquire the assets of the Force India F1 team, newly released documents reveal.

Racing Point paid £90 million for Force India acquisition

An official report from administrators FRP Advisory gives full details of how the process came about and explains why Racing Point – the name used by Lawrence Stroll and his associates – was chosen the successful bidder.

The document has extra significance in the light of a legal claim from Uralkali, a Russian company linked to GP3 racer Nikita Mazepin's father, which has questioned the administration process, and said they put in a higher bid.

Force India had just £240,000 in its bank account at the point administration started on July 27th – just days before the July salaries were due to be paid. Sponsor BWT provided a loan of £5m, which allowed the wage bill and other immediate costs to be paid.

FRP stresses that it sought a “swift resolution” because during August the team faced costs of £9.6m, even with the summer shutdown in force, and because “key members of staff, who we concluded were one of the most valuable assets, [were] being the subject of offers of employment from other teams.”

FRP says that it received “in excess of 20 expressions of interest.” However, by the time of the deadline on August 6th this had been whittled down to five formal proposals.

Only one was on the basis of a rescue of the business as a going concern, which was that of Racing Point, while the others involved only the purchase of the business and assets of the company.

FRP stresses that it is legally obliged to give priority to trying to save the business, which is why Racing Point was chosen.

It adds that the Racing Point proposal included a “fall back offer” to acquire the business and assets for £90m in case the share acquisition could not be completed in time.

The exclusivity agreement with Racing Point stated that should the share acquisition not be completed by August 14th, it would become an asset sale. Racing Point provided a £15m loan, which allowed BWT’s earlier loan of £5m to be repaid.

The share sale was reliant on approval from the Indian banks who had frozen Vijay Mallya’s assets, and thus when it became clear that it could not be completed in time because that approval was not forthcoming, FRP agreed to switch to a sale of the team’s assets and the pre-arranged price of £90m.

The fact that the bidding process was not re-opened at this stage is one of the key complaints of Uralkali.

FRP says that it “took into account the importance of retaining key staff, the fact that staff were shortly to return from their summer holidays, with the upcoming race in Belgium due to take place a few days after their return,” and that the administrators “took a commercial decision to avoid the risk of a significant loss in the value of the business and assets.”

FRP says “it is currently estimated that there will be sufficient funds to pay all creditors in full”, although it's not stated that that was a requirement from FIA and F1 for the team to be allowed to continue under its new identity. The biggest creditors are Mercedes, at £13.7m, and Brockstone – representing Sergio Perez – at $4.0m, while the overall total is £28.5m.

FRP had dismissed Vijay Mallya’s claim that he was a creditor to the tune of £159m, and in fact stated that Mallya and fellow shareholder Sahara actually owe the company £4.2m. No legal action is planned to recover that amount because the shareholders are due to receive the balance from Racing Point’s £90m left after creditors and other costs have been paid.

Several pending or potential legal actions involving Force India remain to be resolved. There are two separate claims for commissions for introducing sponsors, one for £10m and one for £8m. The first already has a trial date set for July 2019.

In addition there is a claim for £3m related to the introduction of a potential buyer, although it was not a successful bidder, while there is a potential claim of £5m from Force India regarding a cancelled sponsorship deal.

shares
comments
Ferrari unveils new F1 livery ahead of the Japanese GP

Previous article

Ferrari unveils new F1 livery ahead of the Japanese GP

Next article

Haas hints at progress on Force India prize money row

Haas hints at progress on Force India prize money row
Load comments
The details that boosted Verstappen and held back Hamilton in Austin Prime

The details that boosted Verstappen and held back Hamilton in Austin

As the 2021 Formula 1 title battle winds towards its climax, the United States GP added another thrilling act in the Lewis Hamilton-Max Verstappen battle. Although Hamilton aced the start, Verstappen and Red Bull took the initiative with strategy and were richly rewarded, despite Mercedes' best efforts as the race went down to the wire

US Grand Prix Driver Ratings Prime

US Grand Prix Driver Ratings

On a baking hot afternoon in Texas, Formula 1 drivers were tested to their limits. As the pressure on the title contending squads reaches an ever-greater level of intensity, the foremost challengers again showed their class, but were outshone by a standout drive from the upper midfield

The 10 greatest drives of lost legend Jo Siffert Prime

The 10 greatest drives of lost legend Jo Siffert

It's 50 years since Jo Siffert was killed in his prime at Brands Hatch. The Swiss scored just two world championship wins in a Formula 1 career spent largely with privateer teams, but showed on numerous occasions in single-seaters and in sportscars with Porsche that he could beat any of the best drivers of his era given the right equipment.

Formula 1
Oct 24, 2021
Why a misunderstood Kimi Raikkonen will thrive in retirement Prime

Why a misunderstood Kimi Raikkonen will thrive in retirement

Three years on from Kimi Raikkonen's last Grand Prix victory at Austin, he is now six races away from ending the longest Formula 1 career in history. His friend and former Ice1 Racing rally team PR man Anthony Peacock explains why there’s nobody quite like the 2007 world champion and why F1 will miss him (but he won’t miss it).

Formula 1
Oct 24, 2021
How Verstappen has become F1 champion material Prime

How Verstappen has become F1 champion material

As Red Bull and Honda go all-out for victory in the Japanese engine manufacturer’s last season of its latest Formula 1 dalliance, Max Verstappen finds himself thrust into a compelling title fight with Lewis Hamilton. He told OLEG KARPOV about his evolution into a world championship contender and why Red Bull's no compromise ethos suits him down to the ground

Formula 1
Oct 23, 2021
Why long-run times should please Red Bull in Austin F1 battle Prime

Why long-run times should please Red Bull in Austin F1 battle

Mercedes has been on a roll of late in the ultra-tight fight to win the 2021 Formula 1 world championship. It started off well in practice at Austin for this weekend’s US Grand Prix, but Red Bull got closer as Friday unfolded and even seemed to find an edge in one critical area of what seems set to be set to be another close contest.

Formula 1
Oct 23, 2021
The six critical factors that could hand F1 2021 glory to Hamilton or Verstappen Prime

The six critical factors that could hand F1 2021 glory to Hamilton or Verstappen

The 2021 Formula 1 title battle is finely poised with six races remaining, as just six points separate championship leader Max Verstappen from seven-time champion Lewis Hamilton. In such a closely-fought season, the outcome could hinge on several small factors playing the way of Red Bull or Mercedes

Formula 1
Oct 22, 2021
Can Whitmarsh appointment help Aston succeed where its F1 rivals failed? Prime

Can Whitmarsh appointment help Aston succeed where its F1 rivals failed?

Aston Martin owner Lawrence Stroll is determined to make the group a billion-dollar business. MARK GALLAGHER analyses his latest play – bringing former McLaren team principal Martin Whitmarsh into the fold

Formula 1
Oct 22, 2021