It has been revealed today that Renault paid just £1 to take over the Lotus Formula 1 team when the deal was finalised just before Christmas, company accounts have revealed.
Delivering an indication of just how keen the previous owners were to find new funding and an investor who could pay off past debts, only a token payment was necessary to finalise the deal.
Accounts also confirm that Genii Capital and its affiliate Gravity Motorsports have retained 10% ownership of the restructured organisation, and waived £98.2m of shareholder loans to the team.
The purchase was a complicated arrangement that involved Genii first purchasing 6,744,444 shares from Whiterock Alliance Ltd, to add to the 60,700,000 it already had.
Having established full ownership of the share capital it then sold 90% to Grigny (UK) Ltd – the company that previously owned the F1 team in its Benetton and Renault days – while retaining the remaining 10%.
Grigny is a subsidiary of Renault, and in fact, its immediate owner is Renault Developpement Industriel et Commercial, or RDIC. It has been in existence since 1977, and between December 1979 and March 2000 it was known as Benetton (UK) Ltd, the start even pre-dating the fashion company’s involvement in F1.
When Renault acquired the Benetton F1 team; the French manufacturer continued to own it under the Grigny name until it was passed on to Genii. In the V8 era, Renault used Grigny for leasing KERS systems to its customer teams, generating some £7m in 2013.
That changed in 2014 when energy recovery became an integral part of the power unit, and Grigny earned just £432,000 from “supplying engineering and technical services to Renault Sport F1,” according to its most recent accounts.
Having almost been dormant over the past year, Grigny is now once again in frontline use by Renault as the immediate owner of the F1 team. Renault completed its takeover of Lotus earlier this month and is expected to outline its plans in a press conference early next year.
But all you can say on the situation is that yes the headline may shock you that Renault bought Lotus for a £1 but that will not be the case. There’s more to this. Let us remember that Lotus were in deep financial trouble and had significant debt that caused them on several occasions Bernie Ecclestone to pay some of their debts off.
And then you have shareholders who will want to have either part in the new arrangement or to be bought out with a profit that reflects the time and commitment they put into the Lotus project. Why would you allow an F1 team who has prestige and history to be bought for a £1 unless something else is ongoing behind the scenes which has not been disclosed to the public for an particular reason.
Let me explain further. Now that Renault have bought out the Lotus team; they will now take on responsibility for their debts and get the team back to the position that we fans know they are capable of achieving in the sport; even if there is a long way for them to go to get there. But it is clear that Renault have gone into this sensibly, made a calculated risk after checking everything is legal and above board and acquired the team.
So with Renault’s future looking more secure in the sport in the way it has been brought to light, I do speak for all fans that this works out to the benefit of everyone associated with Renault and show why they was once the dominant force in the sport especially in the 1990’s, they have everything they need now to do so.