Renault team borrows to stay in Formula 1 fast lane

[John S]

Maybe there's some truth to rumours of Renault parent company buying back the team after all, if the, Evening Standard, story below is the true picture. Seems odd though that Boullier thought they could afford even to talk to Kimi with this pretty big debt hanging over them.
Now if a solid midfield team, run by Genii Capital with at least some manufacturer support, can't balance the books where does that leave all the truly independant teams? 
 
Renault's Formula One team has taken out a loan from one of the biggest banks in Eastern Europe, Lithuania's AB Snoras, to help it stay on track after losing more than £50 million in sponsorship over the past 12 months.

After Sunday's Korean Grand Prix the team lies in fifth place — three higher than it finished last year. It suffered multiple breakdowns off-track in 2009 culminating in its eighth place ranking, which was the worst since Renault bought the team from clothing company Benetton in 2000.

In August last year, the Oxfordshire-based team was rocked by accusations that its boss Flavio Briatore had rigged the result of the 2008 Singapore Grand Prix by ordering his driver Nelson Piquet Jnr to crash.

In the wake of the scandal Briatore left the team followed by its lead driver, the two-time world champion Fernando Alonso. Then there was an exodus of sponsors including Spanish insurance company Mutua Madrilena, Pepe Jeans and Dutch bank ING, which alone was believed to be paying £40m annually. This led to Renault selling a 75% stake in the team in December last year to a group led by Luxembourg-based businessman Gerard Lopez who was one of the early investors in Skype.

Despite becoming a minority shareholder, Renault still provides considerable support to the team and, according to F1's industry guide Formula Money, it spends £38m supplying its cars with 2.4 litre V8 engines.

It's not known when the loan has to be repaid by but it is clear that if the team fails to repay, Snoras could call in its security and take control of it.

By Christian Sylt and Caroline Reid, London Evening Standard, Oct 26.

[lkjohnson1950]

Joe Saward has a good take on this today. According to him, Lopez apparently did not pay cash for his 75%, but borrowed the money from Renault to make the purchase. Now he has again borrowed, this time from 2 Eastern European Banks to pay off Renault. Genii is a company that acts kind of like a used car dealer, buying less than perfect businesses, cleaning them up and reselling them at a profit. It is not clear if Lopez wanted Renault F1 as a flagship for his company, or if he intends to turn it for a profit. There is even a possible tie to the Lotus car company! (Not Lotus F1). There is a theory that Genii bought the company only to hold it until Lotus car company could line up the Team Lotus name and Malaysian financing, with a long term goal to emulate Ferrari and become a maker of luxury sports cars, with an F1 team as an advertising front. All very interesting.

Lonny

[Scott]

I wonder if he can't turn a profit by selling the team back to Renault unless he pays off his debt to them - so he's simply getting out of debt with them and has basically a bridge loan from the banks.

[John S]

So Renault got the Formula One team off their books during the real bad time for automakers in the credit crisis and avoided any tough political questions or embarrasment, but in effect still have control of the team through their loan to Genii. The further debt makes it nigh impossible for Genii to sell on their stake to anyone else, no wonder Renault see no need to buy the team back at present. I'd have to call that real neat, probably better manoeuvring off the track than on it last year - or this for that matter. 
 

[lkjohnson1950]

If the lawsuit over the name "Team Lotus" goes to the manufacturer Lotus and not to Fernandez, Renault could still become Team Lotus and we would see Lotus-Renaults return to the grid. Renault, incidentally, spun off the engine works and retains control of that as a separate entity.

Lonny