SOCHI, Russia (Reuters) - Russian potash producer Uralkali announced legal action against the administrators of the Force India Formula One team on Thursday after having a bid rejected in what it called a “flawed sale process”.
The company said in a statement it was seeking substantial damages in the London High Court for “prejudicial and unequal treatment”.
Joint administrators Geoff Rowley and Jason Baker, for FRP Advisory LLP, said they were confident the claim would be dismissed “at the earliest opportunity”.
“We have acted in compliance with our duties as administrators at all times and oversaw a fair and transparent bidding process which ultimately achieved a very successful outcome for all stakeholders,” they added.
British-based Force India went into administration at the end of July with a number of parties, including Uralkali, interested in buying them.
A rescue deal led by Canadian billionaire Lawrence Stroll, the father of 19-year-old Williams F1 driver Lance who is now expected to switch to Force India, was announced on Aug. 7.
Uralkali co-owner Dmitry Mazepin is the father of 19-year-old Nikita, who is a development driver for Force India. The team are competing at this weekend’s Russian Grand Prix.
The statement did not mention Mazepin but emphasised the business rationale behind Uralkali’s bid.
“The Company sells its fertilizers to more than 60 countries worldwide, including 20 in which Formula One holds its Grand Prix Championship,” it said.
“For several years, Uralkali, together with one of its subsidiaries, has been a partner of Force India and one of the sponsors of the Russian Formula One Grand Prix in Sochi,” it added.
“Force India would be a highly effective and valuable marketing tool for the business.”
Uralkali said the winning bid was lower than the one it had submitted and described the responses from administrators as “inadequate”.
The Russian company said its “extremely generous offer”, that had included a cash consideration of between 101.5 and 122 million pounds ($160.13 million), would have paid more than 40 million pounds to Force India’s holding company, Orange India Holdings Sarl.
The team was previously co-owned by troubled Indian magnate Vijay Mallya, whose assets are subject to the terms of a freezing order in favour of 13 Indian banks, and the Sahara Group.
“We had a strong business case for acquiring Force India and we believe our bid was the best one tabled,” said Paul Ostling, a senior independent director of Uralkali.
“We have serious concerns as to why the Administrators did not use the opportunity to maximise the amounts that could have been paid to creditors and shareholders.”
The administrators, confirming they had been served with a claim, said their primary statutory duty was to pursue a rescue of the team as a going concern.
“When the final offers came in, Racing Point (Stroll’s consortium) was the only party to submit a rescue proposal,” they added.
“Having failed to submit a proposal to rescue the company Uralkali now insists on comparing its bid to buy the assets of the company with a rival bid to rescue the company or buy the assets should that fail.”
($1 = 0.7619 pounds)
Reporting by Alan Baldwin, editing by Nick Mulvenney and Toby Davis