As previously reported there are problems between the buyers of Caterham F1 and the team’s previous owner, a company that involved Malaysian airline magnate Tony Fernandes and others. The new owner – known at the time of the purchase as Engavest SA – says that it agreed terms with the previous owner at the end of June to take over control. However they now say that the seller has refused to comply with its legal obligations to transfer the shares to the buyer. The team says that it has been left in “the invidious position of funding the team without having legal title to the team it had bought”, which it says is in contradiction to a recent press release which stated that the Caterham Group no longer has any connection with the team. Administrators have now been appointed on behalf of Export-Import Bank of Malaysia Berhad (Exim), an organisation with which the buyers have no connection. The team says that appointment of the administrator has had “devastating effects on the F1 team’s activities” and have made statements that have been “severely detrimental to the management of the team”.
The buyer is now saying that it is looking all options, including the withdrawal of the management team and have instructed lawyers to bring
“all necessary claims against all parties, including Mr Fernandes”.
What happens next remains to be seen but if the team is to make it to Austin, immediate action is required.
The key question, of course, is why the shares were not transferred to the new owners. The only logical explanation is that they were pledged in exchange for loans and could not be signed over until loans were paid off.
For the moment the team remains a party to the F1 agreements, as the entry belongs to the Malaysian company 1Malaysia Racing Team. If this entity goes into administration then the team loses all of its rights and benefits. However if the operational arm of the team – Caterham Sports Ltd – goes out of business the assets could be sold to another party and this could take over the running of the team. However there is not much time to do this and there are probably legal hurdles to be overcome. The team can miss a race if it is necessary, but all rights and benefits disappear if the teams misses more than three races in the same year. Thus, in theory, Caterham could miss the final three races of the year and still be considered an active F1 team.
However, it is currently 11th in the Constructors’ Championship and will suffer a huge drop in revenues next season as a result of finishing outside the top 10 in two consecutive years and so it is in the team’s interest to be at the races if it is possible, just in case there is an opportunity to move up to 10th
While the new management has taken a lot of criticism for its handling of the situation, the new claims put a rather different spin on the problems. We await a reaction from the previous owners…