Nicholas Latifi, Force India, Hungaroring

Mazepin company challenges Stroll’s Force India rescue deal

2018 F1 season

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Uralkali, the Russian chemical giant run by the father of Force India’s development driver Nikita Mazepin, has claimed the Formula 1 team’s administrators did not act in its best interests in handling the sale which was agreed earlier this month.

FRP Advisory announced on August 7th a consortium led by Lawrence Stroll, father of F1 driver Lance Stroll, would rescue the team from administration.

However a statement released on Tuesday by Dmitry Mazepin’s Uralkali company claimed “the process conducted by the administrator of Force India Formula One Team Limited may not be in the best interests of Force India creditors and stakeholders, and the sport in general.”

RaceFans revealed last month Mazepin was in discussions to invest in Force India before the team went into administration.

Uralkali submitted two proposals to administrators to save the team, both of which “proposed sufficient funding to satisfy claims of all creditors in full and included an undertaking to provide significant working capital and new investment program over a 5-year term.”

One of the proposals was an offer to purchase the team as a going concern. However following discussions with shareholders Uralkali concluded the team could not be purchased as a going concern due to the Indian government’s freeze on assets belonging to former co-owner Vijay Mallya.

RaceFans understands that due to convoluted legal processes followed in India due to the legal predicaments faced by Mallya, no consent was received from the 13 Indian creditor banks who applied for freezing orders on Mallya’s assets banks, and therefore the sale of Force India by administrators FRP Advisory LLP as a “going concern” was impossible.

Thus the announced acquisition of Force India by the Stroll consortium was reduced to an asset-only sale, and the team becomes a new entity. Under F1’s commercial agreements, teams forfeit their right to a share of F1’s revenues in the event of any change in legal status. Force India’s share of the sport’s 2018 revenues, based on its fourth place in the 2017 classification, amount to an estimated £52,4m, paid in 10 tranches.

This is thought to a major blow to the consortium, which had factored the retention of the team’s shares revenues into its purchase offer. Any deviation requires the approval of all teams, with at least three said to have refused the concession.

Uralkali also made an offer to purchase the team’s assets. Additionally the submitted a development plan for the team and “offered to assume a number of what appeared to be questionable last-minute claims against Force India communicated to Uralkali in the hours before the deadline for submission of the final bid.”

However the Uralkali bid was rejected. “Following the submission of our proposal, the administrator refused to engage with Uralkali team, did not reply to phone calls and emails and communicated with Uralkali in a single email following close of business on August 7, 2018 that it had entered into an exclusivity arrangement with another bidder regarding a proposal to rescue the company,” it said.

The company also claims its demand for a “transparent and fair process to ensure equal opportunities for each bidder” was not respected. A proposal by Uralkali for bids to be submitted in sealed envelopes and opened in front of representatives from each bidder was rejected by the administrators.

FRP Advisory said in a statement: “All bidders were given equal opportunity to submit the best deal for Force India.

“Throughout, we (the joint administrators) have closely followed our statutory duties and objectives as administrators and had the advice of experienced legal counsel.”

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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...
Dieter Rencken
Dieter Rencken has held full FIA Formula 1 media accreditation since 2000, during which period he has reported from over 300 grands prix, plus...

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36 comments on “Mazepin company challenges Stroll’s Force India rescue deal”

  1. How cute… the billionaire daddies fighting over who gets to buy their lackluster kid his very own F1 team…

    1. Yes, we can see that Lance is a little bit spoilt, and he would do good to learn a more positive manner of communication over the team radio during races when things are not going well; but I still believe that we saw moments from him last year which hint that he has a lot more to show us. I’m excited for the move to the new FI and hope he delivers! As the son of several multimillionaire daddies, I have no issue with the extra opportunities afforded him.

      1. Little bit spoilt? Curious standards. Also, he’ll probably be absolutely crushed by whoever his teammate will be, I for one don’t expect anything else.

        1. Do you mean crushed by the other paid drive that becomes his team mate? LOL

    2. @Aldoid LOL. Nicely worded way to point it out.

    3. Always makes me think. if i had the opportunity to get my son into F1, would i do it? Of course i would! Who cares what everyone else thinks!

  2. New Force India loosing their share of revenue / three teams blocking the approval – is that a claim made by Mazepin, or is it confirmed from other sources?

    1. @matthias-wlkp Not Mazepin’s claim, but a syllogism from other sources, by the look of it:

      1) Team needs to legally stay intact or have unanimous agreement from the other teams in order to keep its revenue. (Admittedly, I’m not sure how anything Force India’s done making it lose its funding squares with Marussia/Manor being able to do a full CVA and still retain its income from what was then Bernie’s empire without any sort of vote, but if that’s what RaceFans understand is happening here…)

      2) Mallya’s creditors refused to allow Force India to sell intact. (See paragraph starting “RaceFans understands that due to convoluted legal processes…”, which I think would be straightforward to verify for anyone with sight of the summation of the case – which by this point is probably published on the relevant court’s portal, if I could remember which one handles this type of case.)

      3) 3 teams have rejected a vote for Force India to retain its monies if it is not sold intact. I’m pretty sure there was a story about that on RaceFans earlier this month. I remember wondering at the time wondering what the point of the vote was, but if the sale really was assets-only, it suddenly becomes critical. It means Force India won’t be getting any more revenue from Liberty until 2020 (since they’ll need to build up 2 years of top-10 finishes after this year to get money again).

  3. Why mazepin do not talk with Williams? Groove based team is a more great brand and also need financial (vital) help like hell..

    1. Mazepin would rather drive a Force India than a Williams, I suspect, even if he’d have to wait until at least 2020 before being allowed to race either. (He’s not looking likely to qualify for a Superlicence on 2018 form).

    2. Aren’t Williams the only team that actually makes money? What’s all this that I keep seeing here about how they are financially the worst off team or some BS? http://www.williamsf1.com/pages/corporate/investors/financial%20reports

      1. @darryn, as recently as 2015, Williams was operating at a loss – they made a net loss of around £10 million that year – and I believe that their 2017 profit figure is misleadingly high because it includes the one off payment they received from Mercedes to release Bottas from his contract. On top of that, the accounts also state that Williams made a one off gain in 2017 from selling a plot of land which they owned, which again gave them a one off boost to their turnover and profit figures.

        Their most recent accounts therefore paint a more flattering picture than is true because of those one off deals, which aren’t representative of Williams’s normal operating income (or, rather, losses).

        1. Thanks. That’s why I don’t buy stocks on my own advice.

    3. Williams is too slow.

  4. F1 is just a playground for rich kids, it always was to an extent, but more so now than ever. The guy that delivered my paper could be a better driver than any of them for all we know!

    1. It will be interesting if esports like sim racing will have any effect on making it cheaper to get in. At least a way for the paper delivery guy to get noticed. Some of the physics are getting quite good, but I don’t know how they compare to real life and how it translates.

      1. I hear Williams and McLaren are fighting over who gets the van.

  5. no consent was received from the 13 Indian creditor banks who applied for freezing orders on Mallya’s assets banks, and therefore the sale of Force India by administrators FRP Advisory LLP as a “going concern” was impossible.

    This makes a lot of sense. Seems like a massive backlash for Stroll.

  6. I still smile at the prospect of Coulthard, Brundle @ co’ announcing Niki Temazepam :)

  7. Hurry, hurry, FIA could slip another rule in for next season: drivers cannot be related to any of the sponsors/owners/… of the team/FIA/…. They actually need to be able to drive really, really fast. Wouldn’t that be great?

    1. Unfortunately an anti-nepotism rule like that would be illegal under French law (where the FIA is based) so it could not be made a condition of Superlicence or CRB acceptance (the only points at which a block could be put).

      A method of driver selection where merit in a F1 car could be tested and driver selection limited that way would reduce nepotism substantially – but would require a very different approach to the Superlicence than the one the FIA seems willing to take. (I’m thinking of a week-long test, with 120 slots, auto-reserving free spaces for all current/previous-season F1 drivers, the top 3 F2 drivers, the top GP3, F3 and maybe Formula E drivers, charging a reasonable amount (not too much) for anyone else, and having a compressed race weekend for randomly-selected groups (since there’d probably be only 20 cars there, I think there would need to be two “weekends” per day). People who didn’t finish or underperformed through no fault of their own would get a second chance at the end of the week.

      Only people who finished well (how well depends on how many “slots” got filled) or were still unassessable despite all reasonable attempts would be granted a Superlicence and therefore selectable by teams. I suspect Mazepin will never get into a F1 car for racing purposes on either my system or the FIA’s, but Stroll maybe would have needed to improve some to get in my way, versus the FIA’s way.

      1. @alianora-la-canta, the problem there is that you system sounds convoluted, requiring a lot of resources and creating quite a lot of additional costs, not to mention that the process of allocating seats sounds a bit crude and arbitrary (and very Euro centric, given that open wheeled series in Japan or the US didn’t seem to be mentioned in your list).

        Charging the drivers risks prioritising those who can pay most – “a reasonable amount” sounds somewhat arbitrary, as what might be “a reasonable amount” to one person might be excessive to another.

        Equally, creating a “compressed race weekend” also sounds like it would be pretty expensive for the teams – you are effectively lumping most of the personnel requirements, and costs, of a race weekend onto those teams but, with no way of recouping those costs, making it sound like a drain on resources.

        It also sounds likely to only worsen the problems with staff becoming overly stressed and fatigues that the teams have been complaining about for some time – and, to some extent, potentially also spread that issue to the medical teams, track marshals and all other figures who would need to also be there for all of these “compressed race weekends”.

        I really don’t see what benefit your system offers over just a conventional one or two day test, for example, which would be a lot more economical – the costs seem to significantly outweigh the benefits.

        1. I suspect Mazepin will never get into a F1 car for racing purposes on either my system or the FIA’s, but Stroll maybe would have needed to improve some to get in my way, versus the FIA’s way.

          I’m not sure either that your system is realistic and if it would actually reach the intended outcome. In my opinion, there are two fundamental problems with today’s F1: the difference in performance between the cars is too big, yet the impact of the driver’s talent on the output of the car is too small. With the current state some teams are in today, you sometimes can’t even seriously compare drivers within the same team (cfr. McLaren update policy ALO vs. VAN). This makes it very difficult for fans to assess the true contribution of the driver in the results.

          Whatever the future brings, it is clear that there will be a tipping point in the grid constitution when fans will no longer care & pay to see a majority of uninspiring billionaire boy racers perform their hobby. Unless the likes of Stroll are going to pay us in order to get some spectators …

  8. This is clearly a Wolff/Stroll deal to turn Force India into the ‘Haas’ of Mercedes. Within a year or two, Force India will be buying everything that they are allowed from Mercedes following the Haas model.

    Stroll Snr tried to talk Williams into it at the start of the season however they have too much to lose from their F1 skillset which will impact their engineering business.

    Toto Wolff confirms a few months ago that Mercedes will be happy to supply everything allowed as Ferrari do for Haas.

    Toto Wolff convinces Perez to do the necessary, sending FI into administration allowing the Stroll consortium to snap it up.

    With Stroll Snr at the helm, he can now buy the allowable parts from Mercedes and FI becomes the Mercedes ‘B’ team that they both wanted from the outset. They have just moved their target from Williams to FI after it became clear that the Williams family couldn’t/wouldn’t be bought.

    1. it makes sense but then they have an issue with the drivers. Lance is unfortunately an obvious choice for the first seat. What about the other? Wolff should probably want ocon in this seat because he wants him for mercedes, but perez must have been reassured of a seat for next year in order to pull the trigger for the buyout.

    2. Maybe Williams should have done it and if this is the case and just redirect their resources elsewhere. Just look at the state if them.

  9. With most of the comments so far being jokes about Lance Stroll, it seems easy to forget that these dealings involve saving many, many people’s livelihoods.

    As a fan I just hope we don’t lose yet another F1 team from the grid, especially one of the most competitive (given their budget) teams we have seen for the past few years.

    That aside, I do hope they won’t become a Mercedes B-team, the article about ‘satellite teams’ is pretty timely in that regard. Having yet another B-team just secures the dominance of the rich car/energy drink companies, disincentives classic independent teams and kills the intrigue of teams rising up from also-ran to championship winning teams, because this can’t happen anymore unless we have an arbitrary shake-up of the rules. I’m more concerned about this than Lance Stroll.

    Barring an unforeseen collapse in competitiveness of one of the top 3, the likes of Haas, Sauber, Toro Rosso and now potentially Force India will realistically only ever climb to 4th place in the constructors. Whilst McLaren and Williams can’t compete in terms of budget with the current top 3, their chances of success in the foreseeable future is very low. The only team that could potentially join the top dogs in Renault, yet another works team.

    Over the next 20 years, at least, I think the only chance of a team producing a championship-winning car other than Merc, Ferrari, RB and Renault is if one of those quits. We’d have much worse things to be concerned about than a shake-up to the order if that were to happen.

  10. RaceFans understands that due to convoluted legal processes followed in India due to the legal predicaments faced by Mallya, no consent was received from the 13 Indian creditor banks who applied for freezing orders on Mallya’s assets banks

    While I am no legal expert and do not in any which way say that the legal processes followed in India are straight forward, the allegation that India’s ‘convoluted legal processes’ are at fault for the no consent from Indian creditors and hence the stoppage of Force India’s sale is patently untrue.

    It is Mallya and Subrata Roy’s frauds and misdemeanors which are the real reason for the stoppage of Force India’s sale. Indian legal processes have acted in a fair manner throughout.

    1. It was stated as a factor, not as a criticism, opinion or allegation. If you have followed the various Mallya hearings you’ll know how convoluted the Indian system is – the timeline stretches back to 2009, so almost ten years.

    2. @Sumedh The Indian system is convoluted (i.e. complex), which is relevant because it makes it more understandable that the full nature of the sanctions against Mallya were not understood by the administrator immediately. If the Indian system had been simple (and I’m not sure any nation’s is, when it comes to fraud on the scale shown and alleged), everyone would have known the score regarding the freezes at the beginning. This would have led to everyone’s bids taking them into account from Day 1, rather than having to alter them based on shifting understanding as the facts arrived. Had that occurred, it would probably have prevented this story from occurring – unless the Mazepin organisation supports sour grapes.

      Mallya and Roy’s various financial shenenigans are a factor in why this sale was even contemplated in the first place.

      1. @sumedh

        Indian legal processes have acted in a fair manner throughout.

        Although i agree, i think it is fair to acknowledge the fact it has taken a very long time due to complexities involved.
        @alianora-la-canta

        because it makes it more understandable that the full nature of the sanctions against Mallya were not understood by the administrator immediately.

        I think there is a slight misunderstanding here. I agree that the nature of sanctions play an integral part, talking about it now is somewhat moot because we have crossed that stage.
        Mallya’s international assets were frozen as of May 8 this year when he lost his plea against it. The order was issued by the London High Court. Correct me if i am wrong, but all they had to do was go through the order once, before the sale. Which they didn’t. It is as simple as that. Nothing complex here.

        Here are a few words from a news article reporting the same:

        Fugitive businessman Vijay Mallya’s efforts to challenge the registration of a ruling by India’s debt recovery tribunal in the UK, and the freezing of international assets, failed on Tuesday (8/5/18). A court in London ruled against Mr. Mallya in what will be seen as a legal victory for a consortium of Indian banks seeking to recover £1.145 billion worth of assets.

  11. I’d like to think there comes a time in every billionaire, motorsport loving parent’s life when they realise their child isn’t actually talented enough to be a Formula One driver.

    Nikita Mazepin was a distant fourth out of four drivers in his team in FR2.0 Eurocup in 2015, was severely beaten by two team-mates in Euro F3 in 2016, was third of four again last year, third in his team this year in GP3… and the overwhelming majority of these team-mates don’t look like anything special.

    Dmitry, dude. Buy him a set of golf clubs or something.

  12. My question is about the £52m of FI money. If that money doesn’t go to the Stroll group (or whoever buys FI), does it get spread out among the other 9 teams or back into Liberty’s pockets? Just curious…

    1. @nerrticus Yes. Which is why three teams blocked Force India getting the funds…

  13. It’s a little sad that a lot of the discussions seem to around billionaire daddies instead of the actual sale process.

    I find it highly unlikely that an organisational n would be spending the sorts of funds on legal advice, consultants etc unless there actually was/is the possibility that the sale process was flawed in some way.

    In all honesty I was somewhat surprised at the speed at which the sale announcement was made given that there were (from reports) several parties interested in Force India. That in its own right suggests that the consortium led by Stroll received some preference based on prior dealings (as was the case with Uralkali) with FI.

    Ultimately, it’s the team that is going to suffer unless this whole mess is sorted out very quickly and firmly by the administrators/courts.

    I really feel for the 400 odd employees whose lives are being played with along the two current drivers (both of whom deserve long carreers in F1) through absolutely no fault of their own.

    For the 3 teams that refused to allow the funds distribution to be paid – it would be wise to remember that when you need something that requires 100% agreement.

    1. José Lopes da Silva
      22nd August 2018, 23:10

      “It’s a little sad that a lot of the discussions seem to around billionaire daddies instead of the actual sale process.” As Senna once said, “today or in 10 years, if there is still F1, the drivers will be the centre of the attention. Not the cars, not anything else but the drivers.” What we really care is that there are 17 drivers in F1 and there are 4 buyers, two of them apparently fighting to buy a team.

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