Honda F1 website

DECEMBER 4, 2005

Bankers at play

There is a minor kerfuffle going on between the former shareholders of SLEC over the deal to sell the majority of the Formula One holding company to CVC Capital Partners. BayernLB set the ball rolling by selling its 46.65% share in SLEC to a CVC company called Alpha Prema. At the same time the Ecclestone Family trust company, known as Bambino Holdings, sold its 25% share to Alpha Prema but instead of taking the money put this back into the deal and acquired a percentage of Alpha Prema. Bernie Ecclestone also invested some of his own money to buy himself shares in Alpha Prema.

When all of this was done, Alpha Prema controlled 71.65% of SLEC, in addition to 100% of the voting rights, BayernLB having previously acquired these from JP Morgan and Lehman Brothers. Alpha Prema then decided to try to buy the two 14.175% shareholdings in SLEC owned by JP Morgan and Lehman Brothers. A formal offer was made a few days ago but it was not as large a figure as the two investment banks had been hoping and not the same price as was paid for the BayernLB shares.

According to reports, JP Morgan and Lehman Brothers are now talking about nullifying the sale because they believe they have a legally-binding first option to buy BayernLB's shares but were not told anything about the deal until it was done. This may sound rather troubling but the reality remains that JP Morgan and Lehman Brothers do not want the shares they own but are unwilling to sell them cheaply. Going to legal action over the sale would be a mess for all concerned and so one can safely assume that all the huffing and puffing from the two banks will fade away when CVC raises its offer.

One assumes that CVC has done its due diligence correctly and thus one has to ask whether or not the claims from JP Morgan and Lehman Brothers are correct and why CVC and BayernLB went ahead if there was an option. All of these problems will hopefully not have any effect on the sport.