JANUARY 21, 2005
How to annoy a Formula 1 banker
Bernie Ecclestone has tried to sidestep the three banks which control Formula One Holdings, the parent company of the Formula One group. According to The Economist magazine, two weeks after the High Court decided in favour of the banks in December, Formula One Administration increased its share capital and gave Ecclestone 50% of the voting shares in the company. This cost Ecclestone £1 ($1.90).
The share issue reduced FOH's holding in FOA to 50% and so wiped out the power which had been won in the High Court. The Economist says that the aim of the move was to undermine the banks' case that the articles of association of Bambino Holdings be changed so that the company could not limit the number of directors of FOA, a manoeuvre which gave Ecclestone control of the business in 2002, despite the fact that the banks held 75% of the shares of the business.
If the articles of association were changed, the banks could then take control of FOA but the new share issue would seem to override this case. However, it looks as though the banks have launched another law suit to stop the FOA share issue, which The Economist described as being "highly questionable". A new legal action began on January 5 and we believe that this is what came to court earlier this week, although details remain secret at the moment.
These complex dealings are certainly not designed to win any friends in the banking circles and one would expect that if anything it will stiffen the resolve of the financial men to get Ecclestone out of the business and get control of the empire. That may take time but Bernie is now going to have to do a lot of talking to stop the banks going for his throat.
The disputes leave open the possibility that the banks will decide that they do not want Ecclestone running the business and would therefore be happy to give the GPWC a role in the running of the business once they win control of the business.
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