AUGUST 31, 2004

Formula 1 and Dofasco

There was some excitement at Spa over the stories in circulation that Dallara has been commissioned to build a Formula 1 car for a new team which is aiming to enter the World Championship in 2006. The project is serious with Dallara having already been paid $80m as a downpayment. Recruitment has already started even though there has been no official announcement about who is behind the project. The word at Spa was that there were Russians involved but our sources say that this is not strictly true as the company involved is a Canadian conglomerate which wants to increase its global reach with the specific aim of building up new markets in Europe, Russia and Asia. The company involved is a big player in the steel industry and we believe that the most likely candidate is a firm called Dofasco, which is involved in steel, construction, packaging, distribution and automotive componentry.

The company seems to be right for a global boost. It acquired a new chief executive in the middle of last year and has adopted a strategy of growth by expansion rather than by acquiring rival firms. The company has cash reserves of more than $430m and has a strong cash-flow thanks to booming sales at the moment. The firm made a profit of $110m in the second quarter of the year.

The project is not going to be officially launched until an engine deal has been agreed but it looks like the team will either have a customer Cosworth or will become the first customer for Toyota. That decision will be made shortly and we would expect to have an announcement before the end of the current season. Details of who would run the team are not yet decided.