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GP Week : Issue 29
F1 hit by global financial crisis THE collapse of Lehman Brothers, one of the top five financial institutions in the USA, last week was of vital importance to the world of Formula 1. Lehman Brothers owns 16.8 percent of the holding company of the Formula 1 Group, Delta Topco, and with Lehman Brothers now in administration, a shift in ownership could have a huge knock-on effect to F1. Although Barclays has put in a rescue package to purchase the US investment banking side of Lehmans, and with appointed administrators Price Waterhouse Coopers stating that three credible buyers are interested in taking on the UK base of investment for Lehman Brothers, it is unclear who will end up owning the F1 stake. Lehman Brothers became involved in F1 by default after it was handed shares in F1 instead of the debts it was owed by Kirch Media, the original owners of the shares, when they went bankrupt in 2002. These shares were sold to CVC in 2006 at which point Lehman Brothers bought a stake in Delta Topco. Meanwhile, Lehman Brothers further increased its F1 involvement as a lender to the Formula 1 Group for the debts the company had rung up with the Royal Bank of Scotland, which is understood to sit above the US $1 billion mark. While the collapse of the global market may hand the Formula 1 Group an opportunity of re-purchasing its shares and paying back its loans at a cut price, the overall picture is slightly more concerning. With a number of banking and insurance companies not only involved in the business but also the sponsorship of Formula 1 (RBS, ING, Credit Suisse, Santander and Mutua Madrilena to name but a few), revenue sources may yet have to be reappraised in the very near future. Walkinshaw in the news again FORMER Arrows F1 boss Tom Walkinshaw is facing fresh financial challenges in the UK. UK company, Walkinshaw Performance Ltd, has been issued with a High Court Writ claiming £120,000 (US$250,000 approx) worth of equipment has not been returned to its supplier, Motor Sport Developments Ltd. According to media reports in Chipping Norton UK, where Walkinshaw Performance Ltd is based, the writ states that MSD “allowed the assets and stock to be used at the defendant’s premises as a goodwill gesture whilst the claimant was engaged in negotiations for a joint venture with the defendant. That joint venture did not materialise.” The report goes on to detail that MSD has subsequently requested the return of its property on a number of occasions. The assets are believed to include tooling, machinery, equipment and stock, without which MSD cannot fulfil its existing contractual obligations. Walkinshaw, who departed Formula 1 with the winding up of Arrows in 2003, has recently been involved with Australian V8 Supercars. MSD is claiming £120,500 plus court costs.