Fernandes pins blame for Caterham trouble on buyers
Tony Fernandes has hit back at the new owners of the troubled Caterham F1 team, accusing them of not fulfilling their side of the deal when they took over the team earlier this year.
At the end of June, Fernandes agreed a deal with a consortium of Swiss and Middle Eastern investors known as Engavest to take control of the team. In the past month the team has hit serious financial trouble and the manufacturing arm of the outfit, Caterham Sports Limited, has gone into administration.
On Thursday Engavest distanced itself from the team and its financial liabilities, claiming they were now Fernandes' responsibility as he had not transferred the shares in the team as agreed. Fernandes, who still owns a separate company called Caterham Group, has hit back by saying key conditions of the deal, including the payment of creditors, were not met by the new owners and as a result he has not released the shares.
"In June 2014, I decided, together with my co-shareholders, to sell my stake in the Caterham F1 team," Fernandes said. "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.
"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.
"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."
With the administrators closing the factory on Thursday, the F1 team's future looks in serious doubt with neither side appearing to be ready to take responsibility for the unpaid bills. The team's cars, which are currently at the factory, are due to be shipped to the US Grand Prix on Saturday ahead of their preparation for next weekend's race, but unless a deal can be reached the administrators are not willing to allow access to them.
Caterham Group CEO Graham Macdonald said he and Fernandes had trusted Engavest, but now believes the investors never intended to pay the team's bills. He also questioned why an employee called Constantin Cojocar had been promoted from cleaner to director at Caterham Sports Limited in the space of a week.
"We genuinely believed, at the time, that the sale of the team was the best route for the staff and creditors of the Company, as we felt it secured its long term future. The whole agreement with Engavest was based around a low consideration for the business, with easy payment terms so that creditors and staff could be paid. 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?
"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 use of our factory and site, or anything for the use 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."