29/03/2012
NEWS STORY
 |
Last year was a crucial one for the team now known as Lotus F1. A long-running legal dispute was settled enabling it to change its name from Lotus Renault to Lotus and the iconic car company came on board as its title sponsor. Despite being separately owned, the connection between the team and the car manufacturer became ever closer during 2011. Syed Zainal Abidin Tahir, the managing director of Lotus' parent company, the Malaysian car manufacturer Proton, and Lotus' chief executive, Dany Bahar were both appointed to the board of the team last year. It suggested that Proton or Lotus at least had an option to take a stake in the team and Pitpass predicted just that back in September. Once again, you can safely say you read it here first as a report in the Express newspaper by Pitpass' business editor reveals that Proton does indeed have an option understood to entitle it to buy a 50% stake in the team.
Although Lotus spends around £25m annually sponsoring the eponymous F1 team it does not own it. The team is owned by Luxembourg-based private equity firm Genii Capital which is reportedly considering buying Lotus itself after heavy losses increased the likelihood of the car manufacturer being sold.
Lotus Cars made a pre-tax loss of £21.4m last year and Proton is heading for its second year of declining profits. In January the Malaysian government sold its controlling 43% stake in Proton for £258m ($410m) to DRB-Hicom, a company owned by billionaire Syed Mokhtar Al-Bukhary. DRB-Hicom is reportedly open to selling Lotus and last month Genii chairman Gerard Lopez said "if there is a way that we think the company can be bought and run successfully, then of course we would be interested."
Separately, when Lopez was asked whether the whole point of changing the team's name to Lotus was to keep the historic car manufacturer pumping money into it he responded that "they were the title sponsor, and it's actually been solved in a completely different way. They have and they don't have to anymore, they've done what they have to do, to be very precise." This was interpreted to mean that Lotus is no longer paying the team for its branding but quite the opposite is true.
In fact, recently released documents show that in February Proton gave the team debt, estimated at £35m, which enabled it to be released from its obligations under secured loans with Renault and bankrupt Lithuanian bank AB Snoras. According to the team's accounts to 31 December 2010, it owed a total of £20m to Renault whilst Snoras was due £15.3m. The bank had first ranking security interest over the team's assets, meaning that it could take them over if its loan was not paid back, but this was dropped when the debt from Proton was received.
The documents also reveal that Proton signed a call option agreement with Genii on 3 February and, as Pitpass has previously reported, an F1 insider says that this entitles the car manufacturer to a buy a 50% stake in the team. Proton has not yet taken up the option but this may only be a matter of time now that the team is officially known as Lotus.
With hindsight it would seem to be an incredibly sensible solution for the team to have changed its name from Lotus Renault to Lotus with the former Team Lotus now being known as Caterham. Putting distance between the two teams makes sense since the former Team Lotus is weaker than Lotus in terms of performance.
Likewise, the former Team Lotus is now embroiled in a couple of scandals. It recently lost a lawsuit involving it being in possession of confidential data from its rival Force India. As if that wasn't enough, late last year the team's parent company also appointed two journalists to its board as non-executive directors, one of them keeping completely quiet on his own website for months despite writing glowing reports about Caterham and damning pieces about its rivals such as Force India and Lotus. It opened the two journalists to calls of acting as press officers for the team and, perhaps worryingly, Caterham co-owner Tony Fernandes simply said that they are "extraordinary individuals" when the possible conflict was pointed out to him.
To be scrupulously fair, Fernandes has bigger problems which is another reason why it may make sense for Lotus to put distance between it and the former Team Lotus. In two days time, Fernandes' airline AirAsiaX will suspend its six weekly flights between Kuala Lumpur and London as well as its four weekly flights between Kuala Lumpur and Paris. This follows recent suspensions of its services between Kuala Lumpur and Mumbai and Kuala Lumpur and New Delhi. Next on the chopping block is New Zealand as AirAsia X recently announced that it is cancelling direct services between Kuala Lumpur and Christchurch. It is all due to what the airline calls "soaring taxes and higher jet fuel prices" and it highlights that airlines, like F1 teams, are not cheap businesses to be in.