Formula 1

Racing Point takeover dispute trial set for 2020

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Credit: Octane Photographic Ltd

The legal case between Racing Point F1 Team and Russian chemicals company Uralkali is set to go to trial late next year.

The chemicals manufacturer was one of the unsuccessful parties who tried to buy the team from administrators FRP Advisory LLP when the Silverstone-based outfit fell into administration last year.

The company is led by Dmitry Mazepin, father of Nikita Mazepin, who acted as the team’s test and reserve driver from 2016-18, before joining Mercedes AMG Petronas Motorsport this year as part of a private testing programme, alongside his full-time Formula 2 drive with the ART Grand Prix team.

Uralkali feels that they made a considerably higher bid compared to the Lawrence Stroll-led consortium, who won the bid, saving the team by acquiring its assets and also setting up a company to run the team under a new name. They began the process of taking legal action against FRP Advisory last September.

Uralkali said in a statement: “During this hearing the court considered case management issues and settled the timetable for further steps up to trial, which was scheduled to take place between October and December 2020.

“Prior to trial, the parties to the proceedings will be required to disclose certain correspondence and other documents relating to the bidding process, and will exchange witness evidence in April 2020.

“Earlier in December 2018, two US district courts decided to compel members of the Racing Point consortium residing in [the] US to provide documents and testimony, which may assist in support of Uralkali’s claim in the High Court in London.”

The administrators nonetheless believe they are an innocent party. In a statement FRP Advisory said: “We fulfilled our statutory duties as administrators throughout this process and ultimately achieved a very successful outcome for all stakeholders. We remain fully confident that this baseless legal action will be dismissed.”

Uralkali claim their case has been built around three factors: “failure by the administrators to determine the highest bid in the process – from Uralkali as successful, misrepresentations and lack of transparency in the process run by the administrators”, and finally, a “flawed sales process which failed to achieve the maximisation of sales proceeds for creditors, shareholders, and other stakeholders.”

They added that they had made “an extremely generous offer to acquire the company’s business, assets and goodwill, which included a cash consideration of between £101.5m and £122m, depending on the specific structure of other bids.”

The statement continued: “Despite Uralkali’s generous offer, which we believe was the best bid on the table, the administrators chose to enter into an exclusivity arrangement with a lower bidder and subsequently refused to re-engage with Uralkali or any other bidders.

“Due to Uralkali’s concerns as to the bidding process, Uralkali had no option but to launch these proceedings and seek substantial damages. Uralkali intends to continue vigorous pursuit of its claims against the administrator in the High Court in London.”

The higher bid meant that it may have been possible to pay interested parties, for instance the Indian banks, who wished to claim the assets of the team’s former owner, Vijay Mallya.

Uralkali commented: “The company estimates that, after repayment of all valid claims of creditors and administrator’s costs (based on information from the administrators) its proposal would have resulted in more than £40 million being available to Force India’s shareholders (ie Orange India Holdings Sarl) and, consequently, further used as a source of repayment of any stakeholder claims.”

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