Uralkali, contender for Force India, questions takeover

The takeover of Force India by a consortium of investors from the fashion world, led by Lawrence Stroll, had saved the short and longer term future of the team previously owned by Vijay Mallya.

In great financial difficulty, the structure had been placed under administration, via the company FRP Advisory, following action notably initiated by Sergio Pérez, one of the team's creditors.

A process which quickly resulted in the buyout procedure launched by Lawrence Stroll, father of Lance, current pilot Williams. But a buyout which today raises questions in the clan of another potential buyer, Uralkali, a Russian company specializing in the production of potash.

“Uralkali has assembled a team of professionals (including lawyers, accountants, insolvency experts and a Formula 1) to prepare and submit a competitive bid for Force India, led by Uralkali Independent Director, Paul J. Ostling, underlines the press release published this Tuesday by Uralkali.

On August 3, 2018, Uralkali submitted a proposal including two options:

1) save Force India as a company and acquire a majority stake in Force India to protect Force India from insolvency; And

2) acquire the activities and assets of Force India from the administration company in order to enable the company to continue its activities under a new ownership entity.

Both options proposed sufficient financing to fully satisfy the claims of all creditors and included a commitment to provide a significant fund and a new investment program over a five-year period to ensure the success of Force India […]

During our discussions with the shareholders' representatives, it appeared to us that the rescue option (at least under the conditions and within the time limits proposed by the Director and in accordance with our own code of integrity) was not feasible in due to the complexity of the legal structure, the extended time required to obtain consents from the 13 Indian banks and obtain approval from a UK court for a variation of the freezing injunction.

Uralkali submitted a restated proposal on August 6, 2018 which, for the above reasons, no longer offered a rescue option but offered a very attractive proposal to purchase Force India's business and assets on a going concern basis […]

After submitting our proposal, the administrator refused to engage with the Uralkali team, did not respond to phone calls and emails, and communicated with Uralkali in a single email after close of business on August 7 2018, indicating that he had entered into an exclusive discussion with another buyer about a proposal to buy the team.

Despite the expiration of the deadline set by the Administrator, no rescue plan was submitted for court approval, which confirmed Uralkali's view that the rescue option was not feasible within the deadlines and conditions proposed by the Administrator.

In these circumstances, it is surprising that the Administrator has not attempted to engage with Uralkali in relation to its offer for the assets and operations of Force India.

Uralkali has always emphasized its desire to bring transparency, good corporate governance and financial stability to Force India. In this regard, Uralkali considers that the process carried out by the Administrator may not be best for the interests of Force India's creditors and other stakeholders, and of sport in general. »

If the name remains absent from the press release, it remains interesting to know that Uralkali has on its steering committee a certain Dmitry Mazepin, father of Nikita mazepin, Force India development driver.

Finally, note that as reported by Reuters, FRP Advisory immediately indicated that all potential buyers had had “equal opportunities” to submit an offer.