Rival bidder questions Stroll-led Force India deal

Image by Glenn Dunbar/LAT

Rival bidder questions Stroll-led Force India deal

Formula 1

Rival bidder questions Stroll-led Force India deal

A rival bidder for Force India has claimed that the process that led to the team being purchased by a Lawrence Stroll-led consortium “may not be in the best interests” of Force India and Formula 1.

Russian chemical company Uralkali is run by Dmitry Mazepin — father of Force India reserve driver Nikita — and was one of the parties to make a bid for the team after it entered administration at the end of July. On August 7 it was announced that a consortium led by Lawrence Stroll — father of Williams driver Lance — had agreed a deal with administrator FRP Advisory to invest immediately in the team which would allow it to exit administration and return to solvency.

However, Uralkali released a statement on Tuesday that questions the process after making its own bid for Force India.

“Uralkali assembled a team of professionals (including lawyers, accountants, insolvency experts and a Formula 1 specialist) to prepare and submit a competitive bid for Force India, which was led by Uralkali’s independent director Paul J. Ostling,” the Uralkali statement read.

“On August 3, 2018, Uralkali submitted a proposal comprising two options:

“1) to rescue Force India as a going concern and to acquire a controlling stake in Force India to safeguard Force India from insolvency; and

“2) to acquire the business and assets of Force India from the company in administration to enable the business to continue as a going concern in a new vehicle under new ownership.

“Both options 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 to ensure success of Force India.”

Uralkali claims the first option proved to be impossible as it was given only one business day by FRP Advisory to secure a binding agreement with Force India’s shareholders to acquire their stakes, while also only given two weeks to gain consent from 13 Indian banks due to the freezing injunction on assets belonging to Vijay Mallya.

As a result, Uralkali states it “set out a very attractive proposal to purchase business and assets of Force India on a going concern basis,” while it “also 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.”

Nikita Mazepin tested for Force India at the Hungaroring on August 1. (Image by Zak Mauger/LAT)

The Stroll consortium agreed a deal that sees the business become a new entity, which could lead to Force India losing its share of F1’s revenues. However, Uralkali claims it did not receive a response from the administrator for a similar proposal having earlier called for best and final bids to be submitted in sealed envelopes and opened in the presence of appointed representatives of the interested bidders in order to ensure equal opportunities and a fair process.

“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.

“Despite expiration of the deadline set by the Administrator, no rescue plan was submitted to the court for approval, which confirmed Uralkali’s view that the rescue option was not achievable in the timeline and under conditions proposed by the Administrator. Under these circumstances, it is surprising that no attempt was made by the Administrator to engage with Uralkali with respects to its bid for the assets and business of Force India.

“Uralkali always emphasized its desire to bring transparency, proper corporate governance and financial stability to Force India. In this connection, Uralkali considers that the process conducted by the Administrator may not be in the best interests of Force India creditors and other stakeholders, and the sport in general.”

The Joint Administrators said: “All bidders were given equal opportunity to submit the best deal for Force India. Throughout, we (the Joint Administrators) have closely followed our statutory duties and objectives as administrators and had the advice of experienced legal counsel.”

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