Friday 24th October 2014

Caterham F1 - WTF?

PH attempts to untangle the bewildering situation unfolding at Caterham F1

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As you will no doubt have heard, Caterham Sports Limited, the company that builds cars for the Caterham F1 team, has gone into administration, with staff locked out of the factory adding another twist to the tortuous tale unfolding over at the green team's Leafield base in Oxfordshire. But the genesis of Caterham's ownership wrangling and financial troubles runs way back to the end of June earlier this year.

Fernandes: "If you buy something you should pay for it."

The start
It's a convoluted story, too. According to a Caterham statement, the outfit that actually runs the Formula 1 team - 1 Malaysia Racing Team - was the subject of a deal between "Caterham Enterprises Ltd, Caterham (UK) Ltd and Sheikh Mohamed Nasarudin (Seller) and their shareholders Tony Fernandes and Datuk Kamarudin Bin Meranun, [who] entered into a Sale and Purchase Agreement with Engavest SA (Buyer) with regards to 1 Malaysia Racing Team/Caterham F1 Team."

Simply, Caterham F1's owners agreed to flog the team to Engavest SA. But it's claimed that Tony hasn't actually transferred ownership of the shares, despite no longer having a financial interest.

The middle
Earlier this month Fernandes disputed these claims as garbage, taking to Twitter (@tonyfernandes) of all places in a rather unofficial approach. His sentiment was clear: "If you buy something you should pay for it. Simple."

According to buyers Engavest, this has meant that it "has been left in the invidious position of funding the team without having legal title to the team it had bought." Something, it claims, is in contradiction to Fernandes and his Caterham Group in citing he no longer had a connection with the F1 operation.

It says Caterham on it but who actually owns it?

The consortium of Swiss and Middle Eastern backers argues it's stuck to its side of the bargain, fulfilling all of the conditions required for the sale. But the squabble has broken out into an almighty and very public row, statements flying back and forth yesterday making claims and counterclaims about the situation.

Yesterday
On Thursday Fernandes was holding firm in the press release from Caterham. "We agreed in good faith to sell the shares on the basis that Engavest undertook to pay all of the existing and future creditors, including the staff," he says. "This was so important to me that I ensured 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) been put into administration.

"Our agreement with Engavest was very clear: there was no legal obligation to transfer the shares to them unless certain conditions were met. Those conditions have not been met."

Light at end of the tunnel for drivers? Likely oncoming train

So, sounds like Fernandes is effectively admitting he hasn't transferred the shares because certain criteria have not been met and therefore the deal is invalid. Caterham Group CEO Graham Macdonald weighed into the argument too. "We continue to see claims and counter claims from the F1 team which are totally unfounded," he says. "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."

But yesterday Engavest raised the temperature of the argument with some lurid allegations about the tactics of the Fernandes camp. "The shares have not been transferred and therefore Mr Fernandes remains the owner of Caterham F1 and is fully responsible for all its activities," it concluded in a story from our colleagues at Autosport.

The end?
Fundamentally, the circuitous ownership battle is showing no signs of resolution. Engavest claims it has fulfilled the conditions of the deal, with all creditors paid, including Fernandes for his shares. This means Engavest claims financial ownership. Fernandes says it hasn't, and therefore hasn't transferred the shares, meaning he and his associates arguably still have control of the team. Clear? As mud...

Where does this leave Kobayashi and Ericsson? Er...

What is crystal is that nobody wants to pump any money into Caterham F1 until they know who legally owns it. From the resulting cash flow problem debts have got so bad that, prior to the Japanese Grand Prix, the Sheriffs Office announced it had entered Leafield and seized parts due for the Japanese race and a 2013 F1 test car.

And now it seems the team will find it difficult to race in a week's time at Austin. De facto team boss Colin Kolles says the cars and the team are ready to go, but that without cooperation from the administrators, it'll be difficult to get to the grid for the US GP. The knock-on effect for the road car business remains to be seen in financial terms but word on the street has it staff there are deeply concerned all the same. No such thing as bad publicity? Not a phrase you'll be hearing at Caterham Cars, now in the unenviable glare of a controversy technically unconnected but emotively impossible to detach thanks to the shared branding.

Caterham F1 meanwhile currently holds the unenviable record for the most race starts without scoring a single point since it began in 2012 - its short-term future shows no signs of brightening up either, then.

Photos: LAT Photo

[Sources: Caterham F1 team statement, Autosport]

[The Don of Croy]

Time for PH to step up and grab a piece of the action.

I'll commit up to a fiver - over half a decade - and suggest we crowd source the rest...

Also, do I get my own pit lane headphones with the strange black and red audio connections on the top no-one ever uses?