Formula 1

Caterham future remains in doubt as factory remains shut

5 Mins read

The Caterham F1 Team could be forced to miss the United States Grand Prix at Austin next week after a dispute with administrators thrust their future further into doubt.

Financial issues have blighted the teams’ season, and both Kamui Kobayashi and Marcus Ericsson could be forced to watch the race next week from the sidelines, as well as the final two races in Brazil and Abu Dhabi.

The administrators were called in to Caterham Sports Limited and were appointed by the Export-Import Bank of Malaysia Berhad (Exim), with the teams’ Leafield factory locked down while an offer from the Caterham F1 Team to continue using the site has been deemed inadequate.

The cars are currently inside the factory, which the Caterham F1 Team admits it does not own, but it maintains the cars and the intellectual property inside belong to a company called 1MRT that no longer has any relationship with Caterham Sports Limited.

The future of Caterham has been up in the air for a while, with a series of statements and counter-statements from the new and previous owners. Disagreements between Tony Fernandes and Engavest, the Swiss group that bought the shares from Fernandes in June, have meant that the shares that Fernandes owned in the team have not yet been transferred to Engavest, with both parties claiming the responsibility for the breakdown between the two parties rests with the other.

A strongly worded statement from the Caterham team said the appointment of the administrators had affected the team hugely, with their future participation in Formula 1 seriously in doubt.

“Very regrettably the administrators’ appointment has had devastating effects on the F1 team’s activities,” said the statement. “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 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 insisted that the administrators were appointed by Exim and that the buyers of the team were not connected to the company in anyway and that Tony Fernandes and his Caterham Group were the ones responsible for the outstanding debts.

“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.

“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.”

However, a counter-statement from Tony Fernandes insists the current owners are fully responsible for the current problems, insisting that Engavest would have to pay ‘all existing and future creditors’, if the shareholding was to change.

“In June 2014, I decided, together with my co-shareholders, to sell my stake in the Caterham F1 team,” said Fernandes. “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. 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.”

Caterham CEO Graham MacDonald has queried the ambitions of Caterham’s new buyers and believes Engavest never had any thoughts about paying the creditors.

“It appears to me that they never had any intention of paying these liabilities,” said MacDonald. “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.”

Colin Kolles, who represents Engavest as an advisor, denies the accusations being thrown at the team from Fernandes and MacDonald, and says his backers have done all they can to seek solutions to surrounding Caterham Sports Limited, and the offer they have made to the administrators to be able to continue to use the Leafield factory is their best possible offer. He maintains that the conditions within the agreement with Tony Fernandes have been fulfilled.

“You have to understand this deal was done on full disclosure basis,” said Kolles. “And all the conditions and precedents have been fulfilled by the buyer. We have our position, and there is nothing more to say. But the administrators, they are not seeing the clear picture.

“We say very clearly: the cars and equipment belong to 1MRT. This is a simple fact. This is how it is even written by Mr Fernandes and Mr Riad Asmat in 2011.

“If the administrators think they have to stop it, and if they have a different opinion to it, then we have to go a legal way – which is damages. During the whole period, Tony Fernandes has rejected speaking to the buyer.”

A second statement released by Engavest insisted that all obligations to Tony Fernandes had been met, and that Caterham Sports Limited had been sold and were not under their control.

“Every single condition precedent of the Sales and Purchase Agreement for which Engavest was responsible has been met,” said the statement. “Only the seller, which includes Mr Fernandes, failed to meet his obligations. All salaries have been paid. Engavest sold CSL.”

Kolles insists the team can be ready to leave for Austin within a few hours should the administrators allow them back into the factory in time for Saturday’s departure to the United States as the cars will be prepared trackside in the United States.

“Everybody is prepared to go to Austin,” said Kolles. “The problem is that if the administrators are not changing their mind then it is difficult.”

The arguments have been damaging to the whole Caterham F1 Team, and even Bernie Ecclestone has tried to step in to save the team, even if the whole situation is unclear even to Formula 1’s supremo. He has spoken to both parties but remains in the dark at what is the true state of things within the team.

“We’re trying to help in any way we can, which we do with anybody that has run into a bit of difficulty,” Ecclestone said to BBC Sport. “All I know is what I’ve been told. Not too sure it’s all true either.

“Knowing Colin Kolles, he’s a competent guy. He has managed to get in there and clean things up a lot, stop them wasting money and trying to get it on track. I’d rather not lose the teams.”

Related posts
FeaturesFormula 1

SEASON REVIEW: 2020 Formula 1 World Championship - Williams Racing

3 Mins read
Despite not scoring points this season, there was a clear step-up in terms of the speed of the car for Williams, with George Russell regularly contesting for a spot in Qualifying 2.
Formula 1Season Review

SEASON REVIEW: 2020 Formula 1 World Championship - Haas F1 Team

3 Mins read
Haas F1 Team had another forgettable season, marred with pointless races and unfortunate incidents.
Formula 1Season Review

SEASON REVIEW: 2020 Formula 1 World Championship - Alfa Romeo Racing ORLEN

3 Mins read
Given the circumstances, Alfa Romeo will be relatively pleased with their efforts, they finished in the same place in the constructor’s championship as 2019 and made the best of the few opportunities they were given to score points.

1 Comment

Leave a Reply