Mazepin questions Force India deal

Date published: August 22 2018

Mazepin questions Force India deal

Uralkali, the company owned by GP3 racer Nikita Mazepin’s father, has questioned whether the Stroll-led consortium’s buy-out of Force India is in the best interests of the F1 team.

Force India entered administration late last month with driver Sergio Perez triggering the action in a bid to save the team.

Less than two weeks later it was announced that the team had been saved by a consortium led by billionaire Lawrence Stroll, the father of F1 driver Lance.

However, Uralkali, a Russian potash fertilizer producer and exporter owned by Dmitry Mazepin, has questioned whether the deal is in the “best interests of Force India creditors and stakeholders, and the sport in general.”

In a statement Uralkali said the company had “assembled a team of professionals (including lawyers, accountants, insolvency experts and a Formula 1 specialist) to prepare and submit a competitive bid for Force India, which was led by Uralkali’s independent director Paul J. Ostling.”

The aim of that was to “rescue Force India as a going concern and to acquire a controlling stake in Force India to safeguard Force India from insolvency; and to acquire the business and assets of Force India from the company in administration to enable the business to continue as a going concern in a new vehicle under new ownership.

“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 5-year term to ensure success of Force India.

“Over 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 went on to say that the timeline set out by the administrators was not achieveable as they were required to obtain consents from 13 Indian banks and obtain approval from a UK court for an amendment to the freezing injunction.

“Uralkali submitted a restated proposal on August 6, 2018 which, due to the above reasons, no longer offered a rescue option but set out a very attractive proposal to purchase business and assets of Force India on a going concern basis.”

However, “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.

“Despite expiration of the deadline set by the Administrator, no rescue plan was submitted to the court for approval, which confirmed Uralkali’s view that the rescue option was not achievable in the timeline and under conditions proposed by the Administrator. Under these circumstances, it is surprising that no attempt was made by the Administrator to engage with Uralkali with respects to its bid for the assets and business of Force India.”

Joint administrators Geoff Rowley and Jason Baker from FRP Advisory LLP responded to Uralkali’s statement, saying “all bidders were given equal opportunity to submit the best deal.

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