Renault has signed a letter of intent with the Lotus F1 Team’s current owners to take over majority ownership of the financially struggling team, effectively triggering a return of the French carmaker as a fully-fledged constructor entry in 2016.
“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,” a statement reads.
“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.
“[We] 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 has been in dire financial straits in recent months, with a number of court hearings from unhappy creditors culminating in the latest action in London’s High Court over unpaid tax bills.
The team was threatened with being put into administration unless it could prove it had the means to pay the outstanding amount, and Renault’s letter of intent was enough to give it a stay of execution until December.
The final terms of the buyout have not been officially revealed, but it is understood that Renault will have a 30-day period in which to pull together a financial package whereby most of Lotus’ debts will be saddled with its existing shareholders while it secures revenue from other sources.
Principally, those income streams will come from the Red Bull group (by dint of a penalty fee it will have to pay for early termination of its engine contracts for Red Bull Racing and Scuderia Toro Rosso), Pastor Maldonado’s sponsorship from the Venezuelan government, French fuel giant Total and the Formula One Group in the form of a recognition of Renault’s long-term commitment to the sport.
If this income is guaranteed, it would allow Renault to borrow against future revenues to generate the cashflow it needs to pay off all equipment and facility liens and non-shareholder debts (believed to total around 55 million) and to invest in rebuilding the team back to competitiveness.
The team could further strengthen its coffers by hiring a second pay-driver alongside Pastor Maldonado, with Romain Grosjean almost certain to be confirmed as the lead driver in the new Haas F1 Team.
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