• Eng

PJSC URALKALI continues to sue the Administrators of Force India Formula One Team Limited for substantial damages over a flawed sales process which ignored a higher bid for the business

18.07.2019
Uralkali Statement

PJSC Uralkali (Uralkali), one of the worlds largest producers of potash, launched legal action in September 2018 in the UK against Geoffrey Paul Rowley and Jason Daniel Baker (both of FRP Advisory LLP, and the Joint Administrators of the Force India Formula One Team (Force India)) (the Administrators) regarding the sales process for Force Indias assets which took place in August 2018 (the Bidding Process). Uralkali sues the Administrators for substantial damages arising from its prejudicial and unequal treatment in the Bidding Process.

On July 17, the High Court in London conducted a case management conference, which was an early procedural hearing, of the suit earlier launched by Uralkali against the Administrators. During this hearing the court considered case management issues and settled the timetable for further steps up to trial, which was scheduled to take place between October and December 2020. Prior to trial, the parties to the proceedings will be required to disclose certain correspondence and other documents relating to the Bidding Process, and will exchange witness evidence in April 2020.

Earlier in December 2018, two US district courts decided to compel members of the Racing Point consortium residing in US to provide documents and testimony, which may assist in support of Uralkalis claim in the High Court in London.

Uralkalis legal claim against the Administrators highlights significant areas of concern regarding the conduct of the Bidding Process, including:

  • Failure by the Administrators to determine the highest bid in the process  from Uralkali  as successful;
  • Misrepresentations and lack of transparency in the process run by the Administrators;
  • A flawed sales process which failed to achieve the maximization of sale proceeds for creditors, shareholders and other stakeholders.

When Force India went into administration on July 27, 2018 Uralkali was eager to try and protect the teams future and entered the sale process in good faith. Uralkali set out an extremely generous offer to acquire the company`s business, assets and goodwill, which included a cash consideration of between £101.5 million and £122 million, depending on the specific structure of other bids. The offer proposed sufficient funding to satisfy the claims of all creditors in full (including assumed claims) and included an undertaking to provide significant working capital and a new investment program over a 5-year term to ensure the future success of Force India.

The Company estimates that, after repayment of all valid claims of creditors and administrators costs (based on information from the Administrators) its proposal would have resulted in more than £40 million being available to Force India`s shareholders (i.e., Orange India Holdings Sarl) and, consequently, further used as a source of repayment of any stakeholder claims.

During the course of the Bidding Process and discussions with the Administrator, Uralkali insisted on a transparent and fair process to ensure equal opportunities for each bidder. In particular, Uralkali proposed that the Bidding Process be conducted by way of the submission in sealed envelopes of best and final bids to be opened in the presence of appointed representatives of the interested bidders. However, this proposal was rejected by the Administrators.

Uralkali always emphasized its desire to bring transparency, proper corporate governance and financial stability to Force India. In this connection, Uralkali considers that the process conducted by the Administrator was not in the best interests of Force Indias stakeholders.

Based on facts confirmed to us by the Administrators, the bid accepted by the Administrators was significantly inferior to Uralkalis bid. Uralkalis bid should therefore have been the winner.

Despite Uralkalis generous offer, which we believe was the best bid on the table, the Administrators chose to enter into an exclusivity arrangement with a lower bidder and subsequently refused to reengage with Uralkali or any other bidders. Due to Uralkalis concerns as to the Bidding Process, Uralkali had no option but to launch these proceedings and seek substantial damages. Uralkali intends to continue vigorous pursuit of its claims against the Administrator in the High Court in London.

Uralkali (www.uralkali.com) is one of the worlds largest potash producers and exporters. The Companys assets consist of 5 mines and 7 ore treatment plants in the towns of Berezniki and Solikamsk (Perm Region, Russia). Uralkali employs ca. 12,000 people in the main production unit. Uralkalis shares are traded on the Moscow Exchange.

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