Posted on 23rd October 2014
Caterham bosses threaten to quit F1
This morning it has been announced that Caterham’s new owners could walk away from F1 and take legal action against Tony Fernandes, claiming he has not transferred his shares.
Prior to this year’s British Grand Prix, Fernandes sold Caterham to a consortium of Swiss and Middle Eastern investors, but despite the new ownership the team has continued to be dogged by reports of financial difficulties.
Earlier this week, Caterham Sports Limited (CSL) went into administration and was told told that the team’s car would not be permitted to leave the factory until “an acceptable agreement” is reached.
With the team’s participation in next weekend’s United States GP in jeopardy, the new owners have pointed the finger firmly at Fernandes.
The team released a statement on the issues currently present saying the following:-
'The administrators of Caterham Sports Limited have been appointed on behalf of Export-Import Bank of Malaysia Berhad (Exim), a creditor of Mr Fernandes and the Caterham Group. The Buyer has no connection with Exim. Caterham Sports Ltd was a supplier company to the Caterham F1 Team.
'Very regrettably, the administrators’ appointment has had devastating effects on the F1 Team’s activities.
Since their appointment, the administrators have released various press statements which have been severely detrimental to the management of the Caterham F1 team.
'After three months of operating the Caterham F1 Team in good faith, the Buyer is now forced to explore all its options including the withdrawal of its management team. Lawyers have been instructed by the Buyer to bring all necessary claims against all parties, including Mr Fernandes who, as an owner, will run the F1 operation.'
The statement also added that Fernandes had yet to transfer ownership of the Formula 1 team to the consortium. The team's statement added the following:-
'On 29 June 2014, Caterham Enterprises Ltd, Caterham (UK) Ltd and Sheikh Mohamed Nasarudin (Seller) and their shareholders Tony Fernandes and Datuk Kamarudin Bin Meranun entered into a Sale and Purchase Agreement (SPA) with Engavest SA (Buyer) with regards to 1Malaysia Racing Team Sdn Bhd/Caterham F1 Team.
'Since the date of the Agreement, the Seller has refused to comply with its legal obligations to transfer their shares to the Buyer. The Buyer has been left in the invidious position of funding the team without having legal title to the team it had bought.
This is in total contradiction to the Seller’s press release of 3 October 2014 which stated that Mr Fernandes and his Caterham Group had no longer any connection with the Caterham F1 Team.'
Caterham factory closes its doors
Staff were left locked out of Caterham’s factory in Leafield on this morning as the future of the team looks in serious doubt.
After failing to come to an agreement with administrators on Wednesday, the team’s management threatened to quit and accused previous owner Tony Fernandes of not transferring shares to their investors during the sale of the team in July.
Fernandes responded on Twitter, saying: “If you buy something you should pay for it. Quite simple.”
The situation leaves Caterham in limbo, with team manager Manfredi Ravetto, who has been the public figure head for the new investors running the team, saying he has been told to step back. In an interview with the media this week, Ravetto stated the following on the situation:-
'I’ve been asked by my direct superior entities to step back and this I have to follow. So I presume that now the owners of Caterham F1 Team – who I understand is still Mr Fernandes – has to make all necessary steps from now on. I don’t know how to answer this question. I would have known after last week but the scenario has now drastically changed.'
His comments were followed by news this morning that employees were being turned away from the factory gates by the administrators of Caterham Sports Limited (CSL) – the company that manufactures cars for the entry holder 1Malaysia Racing Team (1MRT).
In an interview with Reuters this morning, Finbarr O’Connell, a joint administrator of CSL stated the following:-
'They [the staff] can’t get into the factory today. They [1MRT] are using my facilities and haven’t paid me.Effectively 1MRT have been in the building for last few days since I arrived. We are trying to reach an acceptable arrangement for them to be there.
'We had a meeting yesterday with 1MRT and lawyers and the offer they made was unacceptable. So I’ve sent them away. Hopefully they can come up with an acceptable proposal.'
With the US Grand Prix just one week away, Caterham’s participation is in serious doubt with its usual preparations on hold until an agreement can be reached. As I have said previously, there is more to this situation than we know about and it is a difficult time for everyone associated with the Caterham team who have been battling hard over the past few months and weeks to sort out these issues and remain in Formula One.
From what the Caterham team have issued in their statements this morning, it is clear that there is more to this situation than we realise. It would be expected that there would be issues as the team transferred to new ownership and would be dealt with in the correct way using the right legal channels. And it would seem that there are still fundamental issues with this legally that are being dealt with at the moment and need to be sorted out as quickly as possible.
I really hope that Caterham using the legal channels do whatever they feel is necessary to sort out the issues within the team and select the best option for themselves and also the team too. Everyone who works for or who is associated with Caterham will understandably be worried about the situation and how it will progress. But all the new owners of Caterham can do is continue to work behind the scenes as they have been and working alongside the ex-owners to resolve the situation.
Fernandes holds new owners of Caterham responsible for their current issues
This afternoon saw ex Caterham ownerTony Fernandes claiming that the Caterham Formula 1 team’s new ownesr are entirely responsible for their current problems.
Breaking his silence over the situation after strongly-worded criticisms from the new owners Fernandes claims that conditions that had to be fulfilled for him to transfer his shares in the team have not been met. That is why he has retained ownership of the team, to the frustration of Engavest.
In a statement issued on his behalf on Thursday, Fernandes said that Engavest had to pay “all existing and future creditors” if the shareholding was to change – something he says had not happened.
Fernandes' statement to the media is as follows:-
'In June 2014, I decided, together with my co-shareholders, to sell my stake in the Caterham F1 team. We agreed in good faith to sell the shares to a Swiss company named ‘Engavest’ on the basis that Engavest undertook to pay all of the existing and future creditors, including the staff.
'The continued payment of staff and creditors was so important to me that I ensured that the shares would not be transferred to the new buyers unless they complied with this condition.
'Sadly, Engavest has failed to comply with any of the conditions in the agreement and Caterham Sports Ltd (the UK operating company of the F1 team) has had to be put into administration by the bank, with large sums owing to numerous creditors.
'Our agreement with Engavest was very clear: there was no legal obligation to transfer the shares to them unless certain conditions – which included paying creditors – were met.
'Those conditions have not been met. Our lawyers have asked Engavest several times to comply with these conditions but they have failed to engage.
'If you agree to buy a business, you must pay its bills. They have breached that promise and now, sadly, it is others such as the employees and the fans of the Caterham F1 team that will suffer if the team ceases to race. I sincerely hope that this will not be the case and that a solution can be found.'
Meanwhile in a statement to the media, Graham Macdonald, who is Caterham Group CEO, has questioned the ultimate ambitions of Caterham’s new buyer. Macdonald states the following:-
'It appears to me that they never had any intention of paying these liabilities. I go on to question how anyone who was interested in the long term future of the business would appoint one of their cleaners – Constantin Cojocar – as the sole director and shareholder of the UK operating company?
'We continue to see claims and counter claims from the F1 team which are totally unfounded.
'Not only have they failed to pay the creditors (and have even left our shareholders to pay some of the creditors on their behalf), but they have failed to pay us anything for use of our factory and site, or anything for the use of our brand name.
'In short the new owners have paid us nothing and, now the administrators have been appointed, they want to walk away from their liabilities.'
It would seem that there is more to the situation than we know at present. The situation is extremely complex and difficult and this will affect everyone who is associated with or works for the team at present. My thoughts are with the staff who for Caterham who have despite the issues surrounding at present have continued to work as hard as ever on their Formula One operation.
It is ultimately clear is that these ownership issues surrounding the Caterham F1 Team need to be resolved using the correct legal channels as quickly as possible in order to make sure they remain racing in Formula One now and in the near future.
Reporting by Sarah Jones
