It was expected after the Belgian Grand Prix that there would be a swift solution to the problems of Lotus F1 Team, with Renault rumoured to be moving in to take over the team. It now seems that the stories were moving rather faster than the reality, although it is clear that Renault has not been doing anything to dampen the speculation. However, the suggestion that Renault is the only option for the team may not be the whole truth. What is interesting is that there have been some fairly detailed leaks to the media, which seem to be coming from Renault and from the Formula One group. One can understand why both would want the deal to go ahead as rapidly as possible. The Formula 1 group wants stability and wants to be able to exert pressure on Mercedes to supply Red Bull Racing, to solve the problems there. From the Renault point of view, if the deal is not agreed soon, it will be too late for the team to switch to Renault power in 2016. Renault has few choices at the moment. It might be possible to acquire Force India, but this is less attractive a team than Lotus. Beyond that, the French firm does not have the money to spend, even given the fact that it is effectively controlled by the French government.
Our sources suggest that the details of the Renault deal that have been leaked to the media are broadly correct, with the company offering a total of $100 million in order to acquire 65 percent of the team. This values the team at slightly more than $150 million. This is not expensive, particularly when one considers that Renault is only willing to commit to an immediate payment of $11.5 million. This would then be followed by annual payments of $8.8 million for a period of 10 years. After that the French firm would commit to finding the money required to cover the annual costs of running an F1 team. The 10 percent of the team that is currently owned by the Russians who were involved with Yotaphone (which has since been swallowed up by Megafon) would be passed over to Alain Prost and he would take on the role of chairman and front man for the team, along similar lines to the role that Niki Lauda enjoys with Mercedes.
The discordant note in all of this is that Renault seems to be content to include Gérard Lopez in the deal, with the suggestion being that he will retain 25 percent of the shares in the company after a Renault takeover. This looks like a face-saving exercise. Lopez and Genii Capital partner Eric Lux did invest some money into the team but, by all accounts, British real estate developer Andrew Ruhan invested more and this resulted in Ruhan turning his loans into equity and taking control of the company, at the start of 2014. He then put his associate Matthew Carter in to run operations at Enstone and has funded the team ever since. There is a limit, however, to the amount of money that any investor will put into a Formula 1 team and it seems that this limit has now been reached. The team is up to its neck in debt, with creditors more and more nervous about the future.
However, the fact that the Renault rescue deal has not gone through confirms the belief that Lopez does not have the power necessary to get the deal done and, it is safe to assume that Ruhan has little interest, presumably on the basis that he feels that he could do better, or that he does not want to work with Lopez any longer. Or both. Given the amounts of money that has been put into Lotus in recent years – probably in the region of $200 million – it is not hard to understand why Ruhan would not be happy with the Renault offer and, as the majority shareholder in the team, he does not have to agree to any takeover, even if others are trying to use the media to put pressure on him, which seems to be what is going on.
This suggests that Ruhan probably has an alternative project, the only other option being to put the team into administration, which would likely end up with Renault buying the assets, if the company survives without being deemed insolvent, as that would mean instant cancellation of all of its rights and benefits under F1’s complicated (and secret) commercial deals. If this is the case, there is clearly something holding it up and one must suppose that something is getting in the way of a deal. One might speculate that this is because Lopez still wants to be involved, even if he has not had much to do with the team in recent months, having begun a new business in oil trading.
As reported last week if the Renault project does get the go-ahead (if, for example, more money appears) then it is anticipated that Bob Bell would be drafted in as the managing-director, with Prost as the Team Principal, to give it the French flavour that would be required. Romain Grosjean would be retained as the lead driver but it is thought unlikely that Pastor Maldonado would stay on. It is not thought likely that the company would go for two Frenchmen (although it has happened in the past), but rather will get the best drivers available.
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