Tony Fernandes says Caterham's buyers to blame for troubles at crisis-hit F1 team
War of words between old and new management breaks out as factory shut to staff on Thursday; Founder Fernandes claims terms of takeover deal not honoured; Caterham's U.S. GP participation in doubt
By James Galloway
Last Updated: 25/10/14 11:16am
Caterham F1 founder Tony Fernandes has hit back at claims made by the operators of the Leafield team over the sale of the outfit, with the Malaysian insisting they have “failed to comply with any of the conditions in the agreement”.
Just days after the chief supplier to the F1 outfit, Caterham Sports Limited, went into administration, Caterham have been plunged into crisis following the break out of an increasingly bitter ownership row between Fernandes and the team's new management.
Fernandes and his Malaysian business partners agreed in July to sell the struggling team to a consortium of Swiss and Middle Eastern investors, which have since been named as Engavest, but the mysterious group on Wednesday night issued a strongly-worded statement claiming that the transfer of shares to them had never been completed. Engavest then issued a further statement on Thursday insisting that they had fulfilled all their obligations in the deal but that without Fernandes releasing his shares in the F1 outfit, the businessman remained “fully responsible for all its activities”.
With the administrator for CSL locking the doors to staff on Thursday amid disagreements with the new operators, the team’s participation in at least next week’s U.S. GP appears to be in serious jeopardy with question marks also growing over their long-term future.
Fernandes, who retains ownership of the wider Caterham Group, has now responded to the growing controversy with a statement of his own. The Malaysian says the takeover deal with Engavest contained clauses dictating that the new owners paid all creditors, something he insists has not happened.
“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," Fernandes said.
“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.”
Fernandes expressed his sympathy for the employees at Leafield and hope that the team wouldn’t fold.
“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,” he added.
In the same statement, Caterham Group CEO Graham Macdonald argued that the buyers had disregarded their responsibilities.
"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?” Macdonald said.
“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 the use of our factory and site, or anything for the use of 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.”