NOVEMBER 12, 2004
A major step in the battle for Formula One
The battle for control of Formula One, the company which holds commercial control of Formula 1 racing, took a major turn on Friday when the High Court in London rejected an appeal by Formula One Holdings against a court action being held in the United Kingdom rather than in a Swiss court. The decision means that the case will go ahead in Britain and we believe that this could happen as early as November 22-23.
The case against FOH has been brought by Speed Investments, a company owned by three banks - Bayerische Landesbank, JPMorgan and Lehman Brothers - which seeks to gain control of the management of FOH, in which they have a 75% shareholding. If they win the case they will be able to change the balance of power on the boards of the various FOH companies so that these reflect the shareholdings. That will mean that the banks will effectively take over management control of the business. This would almost certainly lead to a rapprochement between the Formula One group and the GPWC and it is thought likely that the management of the sport would be transferred to the structures being put in place at the moment by the GPWC with the assistance of International Sports and Entertainment.
A deal had been in place for a settlement between all parties involved, which culminated in a memorandum of understanding at the end of last year but that deal collapsed last spring and so the legal actions began.
Ecclestone can go on defending his position by fighting for control of each board in turn but if he does that he could leave himself open to further legal actions if the banks decide to go after him for causing their shares to lose value. This has all kinds of possible implications and would be a very messy business but it would not stop the process by which control switches from Ecclestone to the banks.
The banks may seem to be confident of victory but, as everyone in F1 knows, it is always very dangerous to underestimate Bernie Ecclestone.
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