Rumours emerged in the past few days that Gerard Lopez’s Genii Capital, owners of Lotus F1, may be in talks to sell the team.
It’s merely a rumour at the moment, but Sky Sports F1 commentator Martin Brundle confirmed it during a broadcast from the Indian GP this morning, suggesting that DRB-Hicom owned Proton might be in the running.
Stephane Samson, Head of Communications and Marketing at Lotus F1 Team, said in response “Yes they have been looking for minority investors like other teams, and they were close to doing a deal recently, however the deal could not be found in the end.”
However Samson was emphatic that “Proton has never been in the loop.” He also made it clear that the team is “still 100% owned by Genii.”
As I confirmed recently Proton is hardly in the position to acquire a F1 team, however there is some sense if DRB-Hicom were looking to sell Lotus as a complete business (reuniting the brand).
This would only be feasible if a buyer had approached the Malaysian conglomerate with a sufficiently attractive offer, since DRB is already highly geared with debts of more than $10bn.
Genii Capital meanwhile has strived valiantly this season as they continue to bootstrap Lotus F1, but the team has fallen behind its main rivals in the development race, making it increasingly difficult for drivers Kimi Raikkonen and Romain Grosjean to win a race in 2012.
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Steve Davies
Steve is an investor, private equity advisor and former Partner at KPMG, PwC and Bain. Most importantly he's a life-long car enthusiast, mountain biker and active sports enthusiast. He designs and builds technology platforms and is the architect behind Transmission.
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Steve, just a rumour? Martin Brundell is an F1 insider. When Eddie Jordan said Hamilton in talks with Mercedes it turned out to be true!
I’m sure DRB-Hicom would like to unite the brand. Interesting stuff.
John Mansfield
As you know John, there are many agendas at play in this messy business surrounding Lotus (just imagine what could have been achieved if all this energy had been focused on building great cars..) and there’s rarely smoke without something to spark it off.
The way I see it, if someone is spreading rumours then it could be Genii/Lotus, if they’re having trouble convincing Kimi that they can raise their game in 2013 (and afford his not insignificant salary).
It could also be DRB-Hicom trying to reassure lenders that they’re going to finally gain control of the brand which they own. It could also be moves by DRB (via an intermediary) to seize control of Lotus F1 in such a way that speculation doesn’t rock their already shaky share price.
And then we can never rule out Bernie, deliberately shaking things up because he wants every team on the grid in 2013 to be capable of putting on a show, rather than limping their way to the end of the season.
Clearly there’s an issue with Genii’s financing of the team – they never intended to bankroll it themselves (remember Dany’s promises..?) and I suspect it might be difficult to gain a minority investor in these troubled times, so I’d imagine the ‘deal’ which was mentioned could not be done, because there was insufficient control being provided in exchange.
There’s no doubt Lopez would like to stay in Formula One, but it’s an expensive hobby and he needs other partners to share the burden.
Steve, how do you imagine this latest Proton/Lotus/F1 speculation is tied in with/related to this point below from the infampus Lotus/Sniff Petrol press release from earlier this year? I could never understand at the time and since, how everybody keeps on saying Group Lotus has zero involvement in the F1 team when this £30m loan exists? Surely in a ‘patronage’ sense, this constitutes their ‘sponsorship’/formal association of the team as it were, though just in the form of a loan and not traditional direct sponsorship? What is your take Steve? :
>>>>> “Lotus F1 Team and Group Lotus have reshaped their commercial
relationship earlier this year. The new governance agreement signifies
the continued commitment of Group Lotus to the team and the sport.
“Group Lotus’ branding and marketing rights and subsequent activities
remain unaffected by the new agreement until at least 2017. Alongside
continued branding and title partnership status, Group Lotus is also the
exclusive master licensee for all Lotus F1 Team merchandise.
“The new agreement was reached following Group Lotus owners Proton
providing team owners Genii with a £30m loan which is repayable within
three years. In order to secure the loan Genii used 100% of the F1
team’s assets as collateral meaning that under the conditions of the
loan agreement Proton have been given full title guarantee to all plant,
machinery, show cars, computers, office and the Lotus F1 Team
headquarters.
“In addition Proton retains the rights to purchase 10% of the F1
team. Another 10% share option will be activated if the team default on
their loan obligations with Proton.” <<<<<
Hi Giuseppe, it’s worth bearing in mind that of the five ‘rumours’ quoted in
the Group Lotus press release, three of them have in essence been proven as
true. They were not technically true, as of 11th April 2012, but just over 8
weeks later the first two had come to pass.
http://sniffpetrol.com/2012/04/11/a-message-from-lotus/
I know who wrote that press release and it’s worth bearing in mind how reliable
their information sources were at the time.
Just a few weeks later (in early May) Dany came to me to clarify the rumours
that had been stirring about Proton having sought buyers for Group Lotus – he
had been assured by Dato’ Sri Syed (MD or Proton) that the rumours were untrue,
I was able to show otherwise. It turns out that Syed had been cut out of the
loop and a separate team had in face been commissioned to prepare a sale
prospectus and begin approaching potential buyers.
So, when Proton say they provided Genii with a £30m loan, I have heard from two
sources that Genii never received any money from Proton and therefore, whilst
an agreement had been structured for Proton to take a stake in Lotus F1 in
exchange for use of the brand this agreement was never consummated with
payment. Therefore if Genii has not been repaying Proton (which is as I
understand), there would be no share option for Proton (now DRB) to inherit.
Lopez said in April 2012 “The sponsorship agreement and the obligations of
Lotus have been terminated. There is no option from Group Lotus to buy into F1
now – that option was taken over by us. There was one, but we have taken it over now.”
Lotus PR man, Alistair Florence, said to me at the time “Group Lotus and
Lotus F1 Team are brand partners, the F1 team uses the strength of the Lotus
name to promote themselves, and in return Group Lotus benefits from F1 exposure
and the ambassadorship of its drivers, and the deal is a non-cost one.”
Therefore my understanding is that no money changed hands, DRB/Proton has no
leverage on Lotus F1 and no advantage over any other buyer if Genii put the
team up for sale.