What happens to F1 if Kirch defaults?

THE Bayerische Landesbank has said that it will not be lending the Kirch Group any more money and that opens the way for Kirch to be taken over by a bigger rival media company. Kirch currently owes the Bavarian state bank around $1.9bn. Kirch owes other banks around $3bn more and is facing up to "put" options for which it needs an additional $2bn in the course of the next few months. Deutsche Bank and Dresdner Bank have both said that they will not loan Kirch more.

It is possible that Kirch will now be forced to default on some of its payments and that could have a disastrous effect on the entire group. The only likely saviour in such a situation is a rival media company such as Rupert Murdoch who is in a strong situation as he has a $1.5bn "put" option with Kirch. Murdoch may use the situation to engineer a takeover of the entire Kirch Group.

Kirch owns the Formula One group of companies and may be forced to sell the business (and the deal for 100 years of F1 commercial rights) to a new owner. Such a deal would still have to be cleared by the FIA which has the right to cancel the 100-year deal if it does not think the new commercial rights holder is a suitable candidate.

Follow grandprixdotcom on Twitter

Print News Story