Administrators Take Over At Caterham

Caterham are in crisis. The well-documented financial issues faced by the team have been in the public domain for some months now, but the situation has since deteriorated in what has been a dire week for everyone involved with the Leafield based squad. Engavest, the now named consortium who purchased the outfit have become tangled in a public conflict with ex-owner Tony Fernandes, who has supposedly failed to transfer the shares to the team. However, Fernandes claims that the group have not lived up to their contractual obligations. Meanwhile, both Caterham Sports Limited (CSL) and Caterham F1 have now gone into administration and the team looks set to miss the US and Brazilian Grand Prix. Strap yourselves in readers – this is complicated.

Tony Fernandes” By lastsham (airasia)
CC-BY-2.0 , via Wikimedia Commons

Where Did It Go Wrong?

It is bad enough to be rooted to the bottom of the constructors championship table, but for Caterham, their nightmare 2014 has become a disaster story. After becoming disillusioned with what seemed to be unsustainable and unproductive spending, long time owner Tony Fernandes sold the team to what became a mysterious Swiss Middle Eastern consortium. However, since then, the situation has deteriorated significantly.
Firstly, the consortium dismissed more than 40 members of staff early on in the takeover. However, 38 members of this group have since declared that they were unfairly dismissed and have taken legal action against the team. According to the team, negotiations have been taking place with the ex-employees, yet these talks seem to have failed to strike a chord, with one former employee having claimed that a settlement had not been offered and neither had they received the money which they were owed.
To compound this, the management restructure of the team failed to work as intended, with Team Principal Chritijan Albers having resigned back in September on account of “wanting to stay closer to his family.” Unquestionably, the flyaway races are a daunting prospect to those leaving family behind, but I seriously doubt that Albers was unaware of the calender before taking the role at Caterham! As such, it is highly likely that this story alone has hidden complexities. Meanwhile. Colin Kolles, who has become the go-to man for financially de-stable teams, seems to have struggled to make an impact in what has been an admittedly short period as an advisor.
After news prior to the Japanese Grand Prix that bailiffs had visited the Leafield factory, it became evident that the financial situation had escalated.  
This week, the anonymity surrounding the Swiss Middle Eastern consortium has come to an end, with the group being named as Engavest. To simplify what has been a complex and confusing debate between this group and Tony Fernandes;

  • Engavest stated that the transfer of shares from Fernandes to them had not been completed, with the latter still therefore owning the team.
  • Fernandes then insisted that the operator had “failed to comply with any of the conditions in the agreement,” hence the shares had not been delivered.
Since these accusations have been made, other names have been thrown into the mire, with Caterham Group CEO, Graham Macdonald backing Fernandes’ story. He bluntly stated that, “the new owners have paid us nothing and now the administrators have been appointed they want to walk away from their liabilities.” Unquestionably, it is a challenging story to debunk. What is clear is that bills have not been paid and the team are now facing an ever escalating challenge.

What Now?

The administrator has highlighted that while the team is not in operation, the situation will only get worse. Obviously, the team have an obligation to fulfil their agreement with FOM and the commercial rights holder by racing, Ecclestone is evidently conscious of the team’s predicament and has allowed them time to recover. As such, Caterham are set to miss the US and Brazilian Grand Prix while the administrator looks for a buyer with Engevast now out of the equation.
Certainly a new buyer would need to have an open mind and a vast budget. Fernandes’ time at the helm highlighted that investment over a sustained period may not be an immediate ticket to success. In addition, Caterham will have to compete with Lotus, Sauber and Marussia who are all looking for investors and at the moment, look like significantly safer options. Fashion magnate Ralph Lauren has reportedly been interested in entering the sport and while he has the financial clout, ($2.3 billion to be precise,) rumour suggests that he is looking for a team to fast-track his son into the sport and Lotus would naturally seem attractive in this regard. 
Hopefully, Caterham will find a buyer who is willing to invest time, money and effort in what is very much a long-term proposition as oppose to a ‘quick flip’.   
 
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