The War of the Billionaires Daddies has come to Formula 1 as Uralkali, led by Russian industrial oligarch Dmitry Mazepin, and Racing Point, fronted by Canadian clothing tycoon Lawrence Stroll, are set to face-off in court late next year.
Uralkali alleges they made a much better offer than the Stroll-led consortium for the stricken Force India F1 team to administrators FRP Advisory LLP [being sued as detailed in the statement below] and as a result Racing Point emerged from the near ashes of Vijay Mallya's former team.
The saga has taken on fascinating proportions as essentially two well-heeled fathers are fighting to buy their respective sons the fanciest and most expensive toy imaginable: a Formula 1 team!
Lance Stroll and Nikita Mazepin, the sons in question, have F1 ambitions with Stroll - thanks to the investment by his father and friends - already in F1 while Mazepin is currently in Formula 2 with ART Grand Prix (arguably the best team in the F1 feeder series) and has experience as a test driver with Force India and most recently with Mercedes.
Stroll junior's F1 career is already three years old and how the $200-million or so spent by his father to get him on the grid is well told, now it appears that the Mazepins are going one better as young Nikita got a taste of the benchmark-setting W10 and promptly went fastest of all during testing in Barcelona earlier this year.
The court case signals the first serious salvo between the warring billionaires over the team they wanted for their sons' toy collections, one which is said to have cost the Stroll-consortium close to $120-million.
Last year guns were loaded when Mazepin's company - who were expected to name the team Forza Russia - released the following statement: “Uralkali considers that the process conducted by the administrator may not be in the best interests of Force India creditors and other stakeholders, and the sport in general."
“Both options 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 five-year term to ensure the success of Force India.”
Joint administrators Geoff Rowley and Jason Baker, for FRP Advisory LLP, responded: "All bidders were given equal opportunity to submit the best deal. Throughout, we have closely followed our statutory duties and objectives as administrators and had the advice of experienced legal counsel."
In a statement this week Uralkali went a step further to all-out war with Racing Point:
PJSC URALKALI continues to sue the Administrators of Force India Formula One Team Limited for substantial damages over a flawed sales process which ignored a higher bid for the business
PJSC Uralkali (“Uralkali”), one of the world’s largest producers of potash, launched legal action in September 2018 in the UK against Geoffrey Paul Rowley and Jason Daniel Baker (both of FRP Advisory LLP, and the Joint Administrators of the Force India Formula One Team (“Force India”)) (the “Administrators”) regarding the sales process for Force India’s assets which took place in August 2018 (the “Bidding Process”). Uralkali sues the Administrators for substantial damages arising from its prejudicial and unequal treatment in the Bidding Process.
On July 17, the High Court in London conducted a case management conference, which was an early procedural hearing, of the suit earlier launched by Uralkali against the Administrators. 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 US to provide documents and testimony, which may assist in support of Uralkali’s claim in the High Court in London.
Uralkali’s legal claim against the Administrators highlights significant areas of concern regarding the conduct of the Bidding Process, including:
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;
A flawed sales process which failed to achieve the maximization of sale proceeds for creditors, shareholders and other stakeholders.
Misrepresentations and lack of transparency in the process run by the Administrators;
A flawed sales process which failed to achieve the maximization of sale proceeds for creditors, shareholders and other stakeholders.
When Force India went into administration on July 27, 2018 Uralkali was eager to try and protect the team’s future and entered the sale process in good faith. Uralkali set out an extremely generous offer to acquire the company`s business, assets and goodwill, which included a cash consideration of between £101.5 million and £122 million, depending on the specific structure of other bids. The offer proposed sufficient funding to satisfy the claims of all creditors in full (including assumed claims) and included an undertaking to provide significant working capital and a new investment program over a 5-year term to ensure the future success of Force India.
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 (i.e., Orange India Holdings Sarl) and, consequently, further used as a source of repayment of any stakeholder claims.
During the course of the Bidding Process and discussions with the Administrator, Uralkali insisted on a transparent and fair process to ensure equal opportunities for each bidder. In particular, Uralkali proposed that the Bidding Process be conducted by way of the submission in sealed envelopes of best and final bids to be opened in the presence of appointed representatives of the interested bidders. However, this proposal was rejected by the Administrators.
Uralkali always emphasized its desire to bring transparency, proper corporate governance and financial stability to Force India. In this connection, Uralkali considers that the process conducted by the Administrator was not in the best interests of Force India’s stakeholders.
Based on facts confirmed to us by the Administrators, the bid accepted by the Administrators was significantly inferior to Uralkali’s bid. Uralkali’s bid should therefore have been the winner.
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 reengage 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.
For the record: Forbes report that Dmitry Mazepin is worth $3.2-billion, while the same source has Lawrence Stroll's net worth at $2.6-billion.
https://www.grandprix247.com/2018/10/04/stroll-led-consortium-paid-117-million-for-force-india/
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