Bernie Ecclestone targeted by another legal complaint
It seems that the sale of F1 to CVC Capital in 2005 has left many dissatisfied, and legal actions are multiplying. Thus, the media group Constantin Medien, which was a co-owner of F1 in 2000, believes it was wronged by the sale to CVC and has therefore filed a lawsuit against Bernie Ecclestone.
This complaint is therefore added to the indictment of banker Gerhard Gribkowski, which led to an accusation against the F1’s chief financier for complicity in breach of trust by the Munich prosecutor. Both legal cases have in common the sale of shares to CVC Capital but do not address the matter from the same perspective.
As the Gribkowsky affair analyzes the intricacies of the F1 share valuation and a possible payment of around forty million euros to the former BayernLB employee, the plaintiff this time is one of the previous owners of F1. Indeed, according to information released by The Independent, the company, then called EM.TV, acquired 75% of the shares of SLEC (for SLavica ECclestone, Bernie Ecclestone’s wife at the time) in 2000-2001, the company that then held the commercial rights to F1.
Nevertheless, the economic crisis at the time forced it to sell 58.3% of SLEC to another German media group, Kirch. Kirch then took out a $1.6 billion loan from a consortium of banks comprising BayernLB, JP Morgan, and Lehman Brothers. To secure this loan, Leo Kirch had used those same shares. When he defaulted in turn, the banks reclaimed the SLEC shares, making them the owners of F1.
These parties then contacted EM.TV for the group to relinquish the remaining 16.7%. While this stake had a book value of 204 million euros, the transaction was conducted on the basis of only 8.5 million euros, a sign that the media group was clearly in dire financial straits. However, a clause was added that stated EM.TV would receive “a portion of the surplus over the loan amount.” Nevertheless, this depreciation of 195.5 million euros contributed to a loss of 310 million euros for the year 2002.
The sale of BayernLB’s shares to CVC Capital was concluded at an amount that brought nothing to EM.TV. Today (six years later…), Constantin Medien believes they were wronged and that the shares were undervalued. This version is, of course, contested by Bernie Ecclestone, who claims that CVC’s offer was the highest compared to the offers received at the time: «They did not buy the shares below their value. On the contrary. Four or five serious offers were for much less. There could have been a big conflict with the teams. It was so close that it would have been easy for that to happen. The shares were not undervalued, and who knows how much they were worth? That’s the whole question.»
He therefore asserts that this new complaint does not worry him at all and that it is only there to increase the pressure on him. We will see if a resolution is found…
With the participation of RacingBusiness.fr
