Caterham F1 goes Belly Up, buyers threaten Fernandes with legal action (3rd Update)
Engavest SA has fulfilled all the conditions precedent, including paying the purchase price for the shares.
The shares have not been transferred and therefore Mr. Fernandes remains the owner of Caterham F1 and is fully responsible for all its activities.
10/23/14
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| Tony Fernandes claims new owners never paid him to buy the team |
Tony Fernandes faces legal action by the 'owners' of Caterham as the Formula One team stand on the brink of going out of business.
Caterham were bought from Malaysian entrepreneur Fernandes at the end of June by a consortium of Swiss and Middle Eastern businessmen, since when the organization has been forced to deal with numerous difficulties. Already facing an unlawful dismissal suit by a group of more than 30 staff axed over the summer, on Monday a supply company to the team – Caterham Sports Ltd – was placed in administration.
Crucially, however, the consortium claims AirAsia and QPR owner Fernandes, along with two other former owners of the F1 team, failed to act in good faith with regard to the transfer of shares of ownership.
In essence, the consortium have been running Caterham over the last few months without being the legal owners. Given the countless issues, they have now decided to withdraw all management from the team and effectively told Fernandes he is again in charge.
Up until Wednesday, Caterham had been preparing as normal for the final three grands prix of the season in the United States, Brazil and Abu Dhabi. But without management, and with Fernandes unlikely to step back in at such short notice, the team face the prospect of their campaign being brought to a premature end, and worse, folding altogether.
Via a strongly worded statement, the consortium said it is to take all legal recourse against Fernandes and other parties.
The statement read: "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.
"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."
Team principal Manfredi Ravetto has confirmed he has been forced to step back from managing the team, as well as insisting Fernandes remains the owner. Via his Twitter feed, Fernandes later hinted he had yet to be paid for Caterham by the consortium.
After retweeting a question from a follower – "I wonder what tonyfernandes has to say…. Could it be he hasn't received payment from the Swiss/Middle Eastern investors? F1" – he then posted: "If you buy something you should pay for it. Quite simple." theguardian.com
10/22/14 The team released this statement: 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.
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.
10/21/14 The maker of the Caterham F1 car has "fallen into bankruptcy, threatening the future of the racing franchise," according to Andy Sharman of the FINANCIAL TIMES. London-based accountants Smith & Williamson were appointed administrators to Caterham Sports Ltd., the Oxfordshire-based manufacturer that designs and builds the F1 cars.
The "cash-strapped" team’s "dismal on-track performance has been more than matched by its corporate travails." Caterham F1, formerly known as Lotus Racing and run under a license held by parent company 1 Malaysia Racing Team, has "yet to win a point in five years of competition and currently sits at the foot of the FIA championship."
The lack of success "prompted team owner Tony Fernandes," the AirAsia tycoon and chairman of EPL side Queens Park Rangers football club, to "sell the franchise and the manufacturing company to a consortium of investors." However, the new owners — whose identity remains unclear — have "struggled to raise sufficient financing, leaving Caterham Sports owing millions to its suppliers." FT
In London, Alan Tovey reported administrators said they have been engaged in "positive" talks with the racing team to "see if CSL can continue to supply it but said that if an agreement cannot be reached they will begin discussions about selling the company's assets."
Administrator Finbarr O'Connell said that "although the around 200 staff working in CSL's factory had their contracts transferred over to 1MRT in the past few weeks," their jobs could be "at risk if an arrangement is not struck soon."
O'Connell: "As administrator I control the machines they are working on, the computers, the factory, the intellectual property. If I don't do a deal with 1MRT then they will have nothing to work on and their jobs could be at risk." TELEGRAPH
In London, Marcus Leroux reported Caterham Sports, which was "previously a subsidiary of 1MRT, had been owned most recently by Constantin Cojocar, a Romanian former footballer, according to the administrator."
The administrator said that Cojocar "indicated in court papers that there was an intention that his associates would provide funding" of $3.2M per week which would be used to "pay the company's creditors but that, unfortunately, the money promised by his backers did not arrive. LONDON TIMES