Williams facing insolvency within 6 months

Last week, Williams announced the launch of a formal sales process. Reading their annual report, one understands the urgency of such a procedure since it is simply the cessation of payments within six months that threatens the legendary British team.

The team is thus unequivocal: « These forecasts include sponsorship revenues, both with and without contracts, as well as revenues and expenses. The baseline scenario indicates that from the beginning of 2021, the group might no longer be able to meet its repayments and deadlines. » While it acknowledges that these estimates are pessimistic, they remain plausible nonetheless. In such a context, it becomes urgent to bring in fresh money, whether from current shareholders or new investors.

To great ills, great remedies. That’s why leaders are looking at the family jewels. Thus, the Advanced Engineering subsidiary, the only profitable part of the group, was already mostly sold at the end of 2019. That’s why a loan was concluded at the beginning of April, with Michael Latifi, Nicholas’s father. It is divided into two parts. The first, 25 million pounds, is mortgaged against the team’s buildings and physical assets, valued at nearly 89 million pounds. The second, 20 million pounds, is secured against the team’s historical vehicle collection, from its inception to 2019. Since part of it was used to repay a loan contracted with HSBC in 2015, the net cash injection corresponds to 28 million pounds.

The collection of vehicles has regularly been used to bring in funds in recent seasons. Since 2015, no less than seven million pounds have been sold in this way to contribute to the war effort to keep the team financially afloat.

The issue is that the less competitive teams on track receive less revenue from the FOM and are therefore less competitive. Doug Lafferty, the group’s financial director, stated: « With a second consecutive tenth-place finish, it is essential for Williams to maximize their return on assets, whether human or capital, in order to break this vicious cycle, regain competitiveness, and thus achieve a viable financial situation. » The new financial regulations, which will come into effect next season, are intended to strengthen the smaller independent teams.

But to benefit from it, Williams must still be there. This is the main challenge in the coming months, and it necessarily involves a return to competition in order to benefit from the valuable TV rights associated with each race contested.

With the participation of www.racingbusiness.fr