MAY 4, 2002

More rumblings from the banks

The boss of the Bavarian state bank Werner Schmidt has told German financial journalists that the bank could join forces with JP Morgan and Lehman Brothers and sell the Kirch stake in the Formula One group of companies.

THE boss of the Bavarian state bank Werner Schmidt has told German financial journalists that the bank could join forces with JP Morgan and Lehman Brothers and sell the Kirch stake in the Formula One group of companies. Schmidt confirmed that the three banks had the F1 stake as collateral for the their loans to Kirch, which total almost $1.6bn. Schmidt said that there could be a decision before the end of June but, rather alarmingly, said that he thought the business was worth between $3.5bn and $4.5bn.

This is a rather inflated figure given that the Formula One group has no contracts with the teams beyond the end of 2007 and there is no sign it is going to get any as the car manufacturers are planning their own series, which will take all the major teams away from the existing arrangements. Bernie Ecclestone is rumored to have offered only $800m to buy back the 75% of the business owned by Kirch, which would value the company at around a third of Schmidt's estimate and the car manufacturers are not thought likely to bid anything more than Ecclestone. Schmidt added that negotiations are already taking place to find a solution. The bank has taken on Thomas Fischer, a former Deutsche Bank executive, to try to do a deal.