Problems mount for Ecclestone as court demands F1 sale documents
Bernie Ecclestone's legal problems relating to the sale of F1 are mounting up after it was revealed that a court in London has demanded that the F1...
Bernie Ecclestone's legal problems relating to the sale of F1 are mounting up after it was revealed that a court in London has demanded that the F1 Group hand over a raft of documents relating to the 2006 sale of F1's commercial rights-holding business to current owners CVC.
According to the Financial Times, among the papers the court wants to see are due diligence reports on F1 at the time of the sale and the refinancing, CVC's loan application to Royal Bank of Scotland, documents relating to new revenue streams at the time of the sale including the then forthcoming Abu Dhabi Grand Prix.
German media group Constantin Medien is claiming damages of $171 million against Ecclestone and others. It claims that the stake in F1 owned by the bank Bayern LB was sold too cheaply as as result of the $44 million payment from Ecclestone to Gerhard Gribkowsky, who was managing Bayern LB's interest in F1 at the time. Constantin Medien was contractually entitled to a slice of Bayern LB's proceeds from a sale.
CVC bought Bayern LB's 47% shareholding in F1 for $814 million, but Constantin Medien claims that its value was higher, according to the Financial Times, "CVC's refinancing a year later implied a valuation of the stake of $2.8 billion." Adding that, "in the disclosure hearing before Mr Justice Vos, Constantin Medien's lawyers argued there was no proper valuation and marketing of the Bayern LB stake before the sale," which they claim was due to the $44 million sum paid by Ecclestone to Gribkowsky, for which Gribkowsky was given an eight and a half year jail term on corruption charges and which is now the subject of Ecclestone's own indictment.
Ecclestone's lawyers say that the sale price at the time was fair and that the difference from the refinancing price a year later reflected new revenue streams opened up in the interim.
It has also emerged that the principle CVC figure in the F1 investment, Donald Mackenzie, described Ecclestone as "very powerful and difficult to manage" in a written submission to the Gribkowsky trial in Munich. Part of that submission was read out in the London court hearing over the Constantin Medien case.Mackenzie and CVC are keen to float a percentage of the F1 business on the Singapore exchange, with an implied valuation of the entire business of around $9 billion, but cannot do so until these legal issues are resolved and the Concorde Agreement signed with the FIA and the F1 teams.
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