Manor creditors to get 1.3p in the Pound

16/03/2015
NEWS STORY

Creditors of the stricken Manor Formula One team are getting just 1.3 pence in the Pound according to a report in the Daily Telegraph by Christian Sylt.

The team crashed into administration in October last year and although it was rescued last month it failed to race at yesterday's season-opener in Australia putting its future in doubt.

According to documents released on Friday by administrators FRP Advisory, the team was rescued with a Company Voluntary Arrangement (CVA) which required "a contribution to be made by a third party to enable £500,000 to be available to unsecured creditors with an estimated distribution of 1.262p in the pound. This is subject to change once all creditors have lodged claims and claims have been adjudicated." It means that, as things stand, anyone owed money by Manor will not get around 99% of it.

The biggest losers in this sorry state of affairs are the people and companies which are owed money by Manor and there are a lot of them. More than 200 creditors are owed a total of £31.4m but they will only get a tiny fraction of it. It is a trail of destruction that hits the companies at the grass-roots of F1 the hardest.

Three of the biggest unpaid bills are £1m owed to Pirelli, £7.1m due to McLaren for providing wind-tunnel and simulator services and £15.2m to Ferrari for supplying the team's V6 engines. However, lower down the list of creditors come companies with far lower resources.

Hospitality firm Freeman's is owed £959,984.88 meaning that it will get just £12,115.01. That's a loss of £947,000. Think about that for a moment before lamenting Manor's failed efforts to race in Australia. Transport firm Circuit 2 Circuit is due £114,126.40 but will only get a paltry £1,440.28 whilst hospitality expert Lynden Swainston will be paid just £651.77 of the £51,645.84 she is owed. Formula Medicine, the physiotherapy firm run by Robert Kubica's former doctor Riccardo Ceccarelli, has not been paid £34,028.38 and will only get £429.39. There are many, many more casualties.

The irony is that many members of the media applauded Manor's attempt to get to Australia. One claimed that that team's story "gives everyone hope." Tell that to the creditors who won't be seeing 99% of the money they are owed.

Having caused financial grief to so many companies at the core of the sport it could be argued that Manor should not have been welcomed back, by the F1 community.

It emerged from administration with backing from Stephen Fitzpatrick, boss of Ovo Energy, whilst Justin King, the former boss of Sainsbury's, has been appointed as its chairman. They may already have the red light because Manor missed three races after it collapsed last year and just days ago F1's boss Bernie Ecclestone said it "would be history" if it skips any more.

If the team collapses again the unsecured creditors will still be paid the £500,000 as it was a condition of the CVA. However, ironically, the team's secured creditor may not be so lucky. It has a secured debt of £25.4m which was originally payable to Lloyds Development Capital (LDC), the private equity division of Lloyds Banking Group.

LDC provided the funding to set up the team in 2010 and became its majority shareholder. Its performance spluttered on track and the team scored just two points since joining F1.

Although LDC eventually sold its stake to Marussia, the Russian sports car manufacturer which the team was named after, it was still owed £25.4m from a loan it provided. The documents reveal that in January LDC assigned its debt to Just Racing Limited which is controlled by Vincent Casey, head of corporate finance at Ovo Energy.

The debt is secured on all of the team's assets but their combined value has reduced significantly since it went into administration. In December FRP held an auction at the team's Oxfordshire factory for nearly 1,000 pieces of its equipment including steering wheels, gearboxes and race suits. The factory itself was sold for £2m, three times less than its book value, to American tycoon Gene Haas who will field a new F1 team in 2016.

A second auction was due to take place but according to the documents this changed after the team "received £50,000 from the potential investor In January 2015 to delay the auction and allow a period of time to investigate the possibility of the survival of the Company through a CVA."

According to the documents, the team is owed £1.5m and although FRP had hoped to obtain £150,000 of it, just £201 has been paid to date.

The red ink began to accelerate in the year to 31 December 2013 when Marussia made a net loss of £11m on revenue of £61.2m. It didn't let up last year when its net loss came to £29.2m on revenue of £24.7m over the eight months to 31 August.

Its main source of funding was investment from Marussia's ultimate owner Russian businessman Andrei Cheglakov. It went into administration in October when Mr Cheglakov stopped paying the bills and most of its 170 staff were made redundant the following month. Although some staff were hired to get the team to Australia, their future is yet again unclear.

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Published: 16/03/2015
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