Tony Fernandes

Fernandes hits back over Caterham claims

2014 F1 season

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Tony FernandesTony Fernandes has responded to claims from Caterham buyers Engavest that he refused to release shares in the team after selling it.

Fernandes, who remains co-chairman of Caterham Group, said the shares had not been released because Engavest had failed to comply with conditions of the sale relating to the payment of staff and the team’s creditors.

“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,” said Fernandes in a statement issued on Thursday.

Earlier today Engavest distributed other statement claiming they had “fulfilled all the conditions precedent, including paying the purchase price for the shares” and that “the shares have not been transferred and therefore Mr Fernandes remains the owner of Caterham F1 and is fully responsible for all its activities”.

However Fernandes denied that was the case. “If you agree to buy a business, you must pay its bills,” he said.

“They have breached that promise and now, sadly, it is others such as the employees and the fans of the Caterham F1 team that will suffer if the team ceases to race. I sincerely hope that this will not be the case and that a solution can be found.”

In July a group of over 40 former Caterham staff brought legal action against the team after their contracts were terminated.

Caterham Group statement

Tony Fernandes, Caterham Group co-Chairman:

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

Sadly, Engavest has failed to comply with any of the conditions in the agreement and Caterham Sports Ltd (the UK operating company of the F1 team) has had to be put into administration by the bank, with large sums owing to numerous creditors. 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. Those conditions have not been met. Our lawyers have asked Engavest several times to comply with these conditions but they have failed to engage.

If you agree to buy a business, you must pay its bills. They have breached that promise and now, sadly, it is others such as the employees and the fans of the Caterham F1 team that will suffer if the team ceases to race. I sincerely hope that this will not be the case and that a solution can be found.”

Graham Macdonald, Caterham Group CEO:

“We genuinely believed, at the time, that the sale of the team was the best route for the staff and creditors of the Company, as we felt it secured its long term future. The whole agreement with Engavest was based around a low consideration for the business, with easy payment terms so that creditors and staff could be paid. The buyers were made fully aware at the time of all outstanding liabilities. However, it appears to me that they never had any intention of paying these liabilities. I go on to question how anyone who was interested in the long term future of the business would appoint one of their cleaners – Constantin Cojocar – as the sole director and shareholder of the UK operating Company?

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 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.”

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Keith Collantine
Lifelong motor sport fan Keith set up RaceFans in 2005 - when it was originally called F1 Fanatic. Having previously worked as a motoring...

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31 comments on “Fernandes hits back over Caterham claims”

  1. This team is doomed.

    1. Nobody really in charge, new and old owners blaming each other, some assets seized… I don’t see how Caterham can even make it to the next race. Pretty sad story.

    2. its the factory staff i feel for, x hope it gets sorted and yoiu guys keep your job’s and team, good look guys!

  2. A big mess. And no way forward in sight with the deadline for shipping to Austin being already around the corner (I think its tomorrow?)

    1. They’ll be there. It’s in everyone’s interest they finish the season now, to get whatever they can from the Eccle$cake.

      Some time next year, they’ll be sold off in bits (staff included) after some long protracted court case and subsequent settlement.

    2. I think I know what’s happening. Fernandes abandoned the team but he didn’t want to look like a bad person, that can hurt business-wise, but he only really made something about it now, after the restructuring and after the new management started to manage debt and move funds from parcel to parcel in a shady way in which Fernandes held the shares making the new owners not make look like the shady stuff is his own doing.

  3. So who’s lying more? I’m sure that both are in the wrong in some way. Any chance that Tony understated the debts owed by his companies, and they balked at it once creditors started asking for payments?

    1. Sadly, it could take years of litigation to find out anything and we may still never know the whole truth.

    2. I certainly wouldn’t want to bet on it, but Fernandes is coming across as the more honest party here. If the “new owners” were genuine and passionate about the sport they would not need to hide in the shadows

  4. Put the contract out there for the world to see, screw this he said/they said buisness

  5. One of their cleaners – Constantin Cojocar – is the sole director and shareholder of the UK operating Company?

    What?

    It’s a bit weird that Fernades did business with Engavest. What about due diligence?

    1. Hard to do due diligence on a brand new consortium of investors.

      1. Well it would include the history of the individuals and their companies. Other directorships and the history of those companies, their accounts and so on. Previous experience of cleaning or football lol.

        Hard to know what to believe. Okay I guess that’s not true – we should believe nothing.

  6. This whole saga is becoming horrible to watch.

    When the three newbie teams were announced I will admit I threw my support behind the then named Team Lotus, and followed them through to Caterham. Firmly believed they were the only one of the three that was sustainable and would remain in the sport. I have a love for plucky backmarkers and always hope they’ll move forward – love a good success story and always hoped they’d lurch into the top ten and prove everyone wrong. (Vettel’s Toro Rosso win was simply awesome)

    But now it looks like Caterham’s truly doomed, really. This is as painful to watch as the evaporation of Super Aguri – I still even own an Aguri shirt!

    F1 really needs to save its teams. People throw their support behind teams they like and it’s painfully tragic when they collapse, so is it any wonder that only the big few gain the large amount of sponsors and support? It seems like a vicious cycle to me and even the bigger teams aren’t invulnerable to it – I loved BMW Sauber and Honda and was so angry when they picked their ball up and left. This is said just as supporter, too – not even mentioning how horrible it must be for those that work there let alone Kobayashi and Ericsson. Playing it all out in public isn’t really a good way of doing things either.

    Losing Caterham – losing any of them – cannot be a good thing as they make up a lot of the character of the sport. I wonder if we’ll never see another team matching the long histories of Williams, McLaren and Ferrari. That I think is extremely sad and really can’t bode well for the future at all.

  7. The statement ping-pong continues and has taken on a truly bizarre twist. Who’d have thought a footballer from the eighties would get namechecked in this mess?

    Here’s the latest from Engavest:

    Engavest SA, strongly refutes the allegations of Tony Fernandes and Caterham Group CEO Graham Macdonald regarding its conduct while trying to purchase Caterham F1. Our statement of earlier today still stands.

    Every single condition precedent of the Sales and Purchase Agreement for which Engavest was responsible has been met.

    Only the seller, which includes Mr Fernandes, failed to meet his obligations.

    All salaries have been paid.

    Engavest sold CSL. It did not appoint Mr Cojocar who, we believe, was a former top footballer for Steaua Bucarest during the 1980s.

    The claims of Mr Fernandes and Mr Macdonald contradict their own press statement dated 03 October 2014

    “Caterham Group wishes to clarify that, following the sale of the F1 business in July, it has no affiliation with Caterham F1 Team”.

    That one sentence alone contains two errors:

    1, the date was June 29

    2, having failed to transfer the shares Caterham Group and Mr Fernandes wholly owned Caterham F1 at the time of the statement, as they do today.

    Incidents such as a Caterham Group representative forcibly breaking into a filing cabinet containing our private and confidential documents and the continued refusal to deal with the outstanding loan of Exim Bank and complete the agreement has culminated in Engavest’s total comtempt of Mr Fernandes and his Group executives with whom we entered a deal in good faith.

    1. Wow, this just keeps getting weirder.

    2. @keithcollantine There doesn’t seem to be any player with that name in Steaua’s history, I got reminded by something I read in recent days… https://twitter.com/hunocsi/status/525584562743939072

  8. Lazăr Constantin „Lucky“ Cojocar was a handballer, not a footballer at Steaua Bucharest!

    1. Handballer not Footballer,thats funny

  9. Usually back-end teams sort of drift away quietly into the night…Caterham are going the Bonfire Night, 4th of July, epic fireworks-style route.

  10. If Caterham does go belly up it would be a shame for Roberto Merhi, since I think Mercedes were ready and waiting with the cash for a 2015 drive.

    1. Merhi-Marciello would be a good line up for a 2015 Forza Rossa team, @william-brierty! Although, if it has a Ferrari alliance, it would probably be Ericsson who gets the nod to bring funding.

      1. what happend to the forza rossa team? its dead silence about it?

        1. @marussi I can’t help but find it very suspicious that Colin Kolles had a part to play in a potential downfall of Caterham just before he attempts to help a new team enter…

          On a more serious note, I don’t think we shall ever see anything of Forza Rossa. They are supposed to be entering in 2015 and there is zero news about them preparing for it whatsoever.

  11. It would seem like the first victim of the expected three casualties of this season of f1 is about to fall

  12. “If you agree to buy a business, you must pay its bills”

    What kind of stupid agreement is that? If you agree to buy a business you should be able to do what you like. You can blame the new ownership all you want, but it sounds like a really shoddy deal to begin with.

    If the terms of the sale weren’t met, why has he kept quiet about it for 4 months now and allowed to team to fall in to disrepute?

    The blame clearly lies at Fernandes feet for all of this in my opinion. Sure he might be the more believable of the parties involved, but that does not excuse his actions.

    1. Fernandes argument is incorrect, atlhough by default it is like he says. In some cases when someone buys a company it buys everything including its debts, so the new owner needs to pay the,
      This was the case when BMW sold the Rover Group by the simbolic price of £1.
      But not all sales are done like that. There are cases that some company assets are sold but previous debts are shared between previous owner and new owner, or sometimes the new owner buys only parts of the company.
      Nevertheless this seems not to be the issue as Engavest response states they had paid the bills.

      Engavest seems to be a bit shady, no doubt, but Fernandes and his group also does not look very good.
      As some say, there are always 2 sides to a story and the truth usually lies somewhere in the middle.

      1. I think you’ve hit the nail on the head here. The team was probably sold for a token amount, assuming that the new owners would look after the staff, and take on the liabilities. The new owners probably had no intention of doing this, but saw the opportunity to acquire some serious IP for a token sum that they can then resell. (Which us why they wish to remain anonymous) . Happens all the time.

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