BAT wants to buy Forsythe and Pollock out

UPDATE A reader writes, Dear AutoRacing1.com, My understanding is that ALL of the outstanding shares not owned by BAT where pledged as collateral in 2001 (??) for the loans BAT advanced the team to stay afloat when the team had spent its way through the original allocation of investment in record time. The non-BAT owned shares were in excess of thirty percent however the majority of those have simply been 'converted' to BAT ownership in lieu of repaying the loans they collateralized. The liened shares did not affect the owners of the shares voting rights, which is the reason Pollock and others managed to stay on the board after Pollock was pushed out.

The fact that the remaining shares outstanding were used as collateral for loans that have not been repaid to date makes it basically an accounting / administrative move for BAT to declare the loans in default, since BAR still can't repay the loans and in any event BAR would not want to service the loans if it would give Pollock any advantage, to find the team in default forcing it into administration ('receivership' in US terms) in an effort to collect the monies owed and then simply negotiate with the receiver to 'pay' the loans to itself for a minimal amount in exchange for the shares as the bottom line on the balance sheets for the team remain all red ink. Unless there are other substantial creditors in line demanding payment in full it should be a pretty straight forward process.

In essence a booking move to avoid having to pay original investors. While legal it is not entirely ethical from the perspective of many as Mr. Forsythe and the others invested in good faith and the F1 community does not want the stigma of stiffing investors to negatively impact future investors from minority participation in F1 teams or the industry in general.

By the way great web site, very current with lots of information and breaking news on Champ Car particularly. Champ Car is getting more and more interest 'across the pond' and with its new owners many think it is on the road to becoming the only relevant North American based open wheel series. Kindest Regards, Name withheld by Request 11/24/04 BAR F1 team owner British American Tobacco may be forced to put the team into bankruptcy in order to complete Honda’s 45 per cent buy-in, Autosport reports. The dramatic move may become necessary because a 10 per cent stake is still held in the team by Adrian Reynard, Craig Pollock, Rick Gorne and Gerry Forsythe, four of BAR’s founders. Honda only wants its stake if the minority shareholders are removed, and an offer has been made to buy them out. Should they refuse to accept that offer by the end of this week, BAT would put the team into bankruptcy – in effect putting the minority stake into the hands of receivers–and then buy it back. This will have the effect of removing the four minority shareholders and clarifying ownership of the team, with BAT holding 55 per cent and Honda 45 per cent. Autosport Magazine