Renault’s letter, Lotus’s debt

Renault said this today:

‘Renault Group and Gravity Motorsports S.a.r.l., an affiliate of Genii Capital SA, are pleased to announce the signature of a Letter of Intent regarding the potential acquisition by Renault of a controlling stake in Lotus F1 Team Ltd.

‘The signature of this Letter of Intent marks Renault’s first step towards the project of a Renault Formula 1 team from the 2016 racing season thereby extending 38 years of commitment of the brand to world’s premier motorsport championship series.

‘Renault Group and Gravity will work together in the coming weeks to eventually turn this initial undertaking into a definitive transaction provided all terms and conditions are met between them and other interested parties.’

Lotus F1 said this:

“Renault Group and Gravity Motorsports S.a.r.l., an affiliate of Genii Capital SA, are pleased to announce the signature of a Letter of Intent regarding the potential acquisition by Renault of a controlling stake in Lotus F1 Team Ltd.

The signature of this Letter of Intent marks Renault’s first step towards the project of a Renault Formula 1 team from the 2016 racing season thereby extending 38 years of commitment of the brand to world’s premier motorsport championship series.

Renault Group and Gravity will work together in the coming weeks to eventually turn this initial undertaking into a definitive transaction provided all terms and conditions are met between them and other interested parties.”

I say this:

they bought themselves some time, or at least until December, and Renault just paid a big debt for them to have a look at buying them.

Lots of stories about Alain Prost being the head of the team, Renault trying to get historic team status and money from Formula One Management (FOM) and even Fernando Alonso as a person of interest to replace a departing Romain Grosjean.

What I do know is that Letter of Intent is good but far from a done deal. Very far in fact.

However, I suspect Renault will make good on the deal and see the team in a new iteration in 2016 and I’m happy about that. Question is, is it good to have Renault, another manufacturer, in the sport when privateers are struggling to compete due to outlandish engine supply deals? Perhaps the FIA’s new cost cap scheme will work and allow for a more sane expense.

The fact is McLaren, Williams, Force India, Sauber and Manor are all struggling and even a team with the resources like Red Bull (still a privateer) can’t even get an engine supply lined up without teeth-gnashing, I’m not sure how the FIA will get engine makers to give their power units away on the cheap.

I’m by no means marginalizing today’s announcement but I know that and LOI is not a completed deal and have seen many transactions fail even with LOI’s. So, F1 and the FIA should still be focused on both privateer and manufacturer and a way to help Lotus and Red Bull participate.

Bernie Ecclestone has done some of that as he was rumored to have covered some payroll for Lotus and fed the mechanics. Question is, how far will they go to help the team and how much debt is Renault willing to take on? I find it odd that acquisitions assume debt in this line of thinking when most are asset-only acquisitions.

0 0 votes
Article Rating
Subscribe
Notify of
guest

This site uses Akismet to reduce spam. Learn how your comment data is processed.

5 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

MichaelB

Fernando leaving McLaren to go to Renault? Given his piss poor record for team selections, I could see him actually making this boneheaded move… Granted, it can’t get much worse where he is now…

Mr. Obvious

I suppose the devil’s in the details. If Lotus/Renault get to keep their Merc engine supply for 2016, I’d say that’s about as close as Alonso is likely to get to the sharp end of the grid.

Tom Firth

Well it’s better than no news at all. Your right though Todd, far from a done deal.

“thereby extending 38 years of commitment of the brand to world’s premier motorsport championship series”

What about the few times, disappeared in the 80’s and the new years did in the 90’s? nice commitment in some of those years Renault.

Copyshop attendant

Ok just a conspiracy theory here… last year’s split from Renault has been extremely easy for the Lotus team. Far simpler than what we’ve seen this year with RedBull… Lotus then got the Mercedes lump and now, one year on, Renault is about to buy the team back…. What if all this was planned in advance? How about Renault leaving key personnel in Enstone already in 2015 to have a close look at the internal workings of the Merc lump in view of getting the team (and knowledge) back in 2016?? Ta Taaahhh (sound bite)

MIE

All anyone can see of the power unit is the external shape. The units are sealed by the FIA, even the manufacturer cannot open them up for inspection. Renault would be able to gain as much advantage as Honda did from examining the Mercedes in last year’s McLaren.