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Behind the machinations at Lotus
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Posted By: James Allen  |  22 Nov 2013   |  2:03 pm GMT  |  149 comments

The curious situation surrounding the Quantum Group and its investment in Lotus F1 Team has become a little clearer with comments made by its leader Mansoor Ijaz, to our partner site in France, F1i.

Angered by an article the site had written about him not being a serious businessman due to his involvement in a semi-nude women’s wrestling video and the non-appearance of funds in the bank account of Lotus’ owner, Luxembourg based Genii Capital, Ijaz contacted the site to explain the position, explaining away the video and claiming that the money had been transferred, but had not been allowed to pass through to Genii,

“The fact is that Luxembourg isn’t considered as irreproachable by the US banking system, ” he said. ” That explains why we have had to review the operation and structure the financing differently. The money has been sent back to us and we have to make the payments using a different mechanism. That is not the work of a moment.

“We never wanted to communicate the deal in June (when Genii and Lotus announced it), it’s Gerard Lopez (Genii boss) who took that initiative. But our investment is real and you (media) will all look bad with all your insinuations, when the deal is concluded with Lotus.”

The F1 paddock is not sure what to make of Ijaz, whose Quantum fund features money from Brunei among other investors. A Google search of him brings up some surprising past experiences. But that wouldn’t make him unusual in the F1 paddock.

He was at the races in Abu Dhabi and Austin and has, on both occasions, been allowed a platform to speak to media by the Lotus F1 Team management, which is interesting.

Our colleagues at F1i believe that the deal is €120 million for a 35% stake in the Lotus F1 team, which values the business at €400 million. They say that, currently, Lopez and his partner Eric Lux are putting in €8 million per month to fund the team.

It’s certainly the case that the team has lost quite a few staff lately (a number to Caterham in particular) amid rumours that monthly pay checks have not been paid.

Kimi Raikkonen went public that he had not been paid and he has chosen to have back surgery rather than compete in the final two rounds.

Heikki Kovalainen was drafted in for the US and Brazilian GPs and will be hoping for a better run this weekend than in Austin, where he was 15th.

Lotus needs the points in a tight championship battle with Ferrari and Mercedes.

Although Quantum continue to say that Nico Hulkenberg is the name they would like to see in the second Lotus car next season, paddock rumour continues to place him at Force India for 2014. Hulkenberg was considered for the seat for the final two races and could have got the release form from Sauber, as they had admitted earlier in the season that they had not been able to pay him so he was free to moveis something came up.

However Hulkenberg wisely concluded that, with his reputation and standing greatly enhanced by his performances this year, he was on a hiding to nothing going up against an in-form Romain Grosjean in an unfamiliar car for two races, when he could qualify a Sauber in the top five on the grid anyway.

Pastor Maldonado is the likely candidate for the seat; he has left Williams and is ready for the move. However his backers, Venezuelan oil company PDVSA is understood to be asking questions about whether their $30 million will be going towards Lotus’ 2014 racing programme or paying off debts from 2013. Maldonado has been conspicuously making the point this weekend that Sauber remains an attractive alternative.

There is a potential clash with French oil company Total, an existing Lotus partner, but they are believed to be gravitating towards their relationship with Red Bull in any case.

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1

Two three races down and Lotus will have recovered – otherwise, way too embarrassing to Renault F1 Sport. Lotus made 2013 F1 interesting, and will again (I hope).

REQUEST to jamesallenonf1: Could you investigate, please, whether Lotus has finally paid the base salary plus all bonuses for 2013 services to Kimi Räikkönen and all the other team members – and whether they included interest for late payments; and write a little story about it. Whether I watch them, depends first on whether they are honourable.

2

Pretty! This has been an extremely wonderful post.

Thank you for supplying this info.

3

Agreed….kimi is one smart cookie, i am sure he warned the hulk about the situation. Lotus might have used this muppet to drum up some kind exposure but my gut feeling is that the money will never arrive, he will pull out saying its not what the ‘investers’ had in mind. I just wish the journos would keep digging

4

Mmm…cheque in the post?..how many times has someone said that. My personal view is …SCAM, this guy is a joke, how can any team fall for this. I watched the sky interview after austin and just fell about laughing,every word was pure bull, next year i think i might buy a team, swan around at the expense of the owners, have free travel to each track and be wined and dined with a all access pass to the pits and paddock.” Really mr wolf,my money is good,it takes a while for me to cash in my premium bonds”. All i need to do is wait till the end of season then say,”well i really think f1 isnt the right platform for my pie business”. Wake up lotus…pay your staff what is owed then get back to winning races.

5

Agreed. Easiest way to spot a scam artist and a buffoon, look at his own website (21Dec2013): “Mansoor Ijaz (born August 1961) is an American financier of Pakistani ancestry and an owner of the Lotus F1 Formula One team.”

Based on this, Lotus owners also come across like complete idiots; no wonder Kimi Räikkönen left (he smelled the rat).

6

looks like they have Maldinado’s money. Such a shame. Was hoping for Hulk.

7

James, what is the situation with Sauber and the Russians ? Sirotkin was confirmed, then there was talk he wouldn’t be ready so he could be replaced by Petrov next year, and now there is talk Petrov could go to DTM and rally, so now… we don’t know. Are we still sure there will be a Russian driver in a Sauber next year ?

8

My understanding is that the money that’s come through so far hasn’t been a game changing amount

9

Ijaz is not getting good reviews from many sources. Quite a worrying period for F1, too much unwanted news, especially drivers not getting paid. Am sure besides Kimi spilling the beans, those who haven’t been paid are keeping silent just to hang on in F1. A big team like McLaren losing Vodafone is not a small issue. Just hope all will be well for 2014.

10

Bring back tobacco advertising. All teams will then easily find sponsors and everyone will get paid. Oh, and pay-drivers would disappear as well. It’s not as if drivers, team members and crews will have to be seen smoking or anything. It’s just words and logos. It would also be very nostalgic.

11

There’s no money. They’d be able to move that money tomorrow if it was available (or clean LOL).

12

Bernie always said he preferred 10 teams… We all thought he was talking about Marussia. Turns out it’s Team Enstone / Genii / Fake Lotus.

Oh well… The only thing that is a small shame is that Grosjean fellow. Hopefully he can test for a year with a big team, ala Hulkenberg, and pick up where he left off in 2015.

I wonder if this could be the record for a team folding after the highest WCC position, probably 4th in this case. I’m sure if they do, it’ll be after BE pays the prize money, which means fun and games until January.

13

James, I love your site and reporting, but can’t help but feel that something was missing in this article, especially with the following paragraph…

“The fact is that Luxembourg isn’t considered as irreproachable by the US banking system, ” he said. ” That explains why we have had to review the operation and structure the financing differently. The money has been sent back to us and we have to make the payments using a different mechanism. That is not the work of a moment.

I wished for a few sentences that attempted to explain what that paragraph means.

Is Quantum in trouble in the US and risk having funds confiscated? Has the money been laundered? Why would ‘different mechanisms’ be needed if financing was anything other than ‘above board?’

Common sense tells me if something is THIS complicated, then it can’t be on the up and up. If otherwise, it would have been helpful to understand. Mystery isn’t helping Quantum, or Lotus, as far as I’m concerned.

14

It would be a great shame to lose the Enstone team if money problems overwhelm them.

As for Hulkenburg, with so many variables caused by all the technical changes, he might as well opt for Sauber or toss a coin. Of the available seats there are none with teams with the strength in depth to put right deficiencies in the car that would only become apparent in pre-season testing. Even Ferrari and Mclaren have struggled to develop poor cars this year.

Hulkenberg deserves a top seat but at this stage nobody can be sure where eghey will be on the grid

15

If the Quantum investment does not arrive soon, will the team fold? Ever since Marussia got their commercial deal with FOM, I have been wondering who Bernie was expecting to go to fit his 10 team ideal. If Lotus are going to continue, have they even started or have the resources to be competitive in 2014?

16

James I remember reading over summer that the boss of a building company had bought 4 or 5 % of the team so how did he manage this when Ijaz is having so many problems?

17

I expect it was because he actually had the money.

18

Didnt Lotus/Genii let Andrew Ruhan buy a board seat and 2% of Lotus F1 for a little over a million euros earlier this year?

I fail to see how the firm has appreciated 300% in a matter of months!

20

It’s a lot of fun to watch all the Google journalists being happy to have googled some breaking news, usually found in the reports of other Google journalists, and not bothering to read any piece of what real journalists have written.

21

couple of points: 1. I”m not surprised people are leaving Lotus for Caterham as Caterham (Leafield)are about 30 miles at the most from Lotus (Enstone) and a number of guys probably went in the other direction when Arrows closed.

2) Sauber would be a great investment. BMW built some great facilities including a top line wind tunnel with a high level super computer down in Switzerland. The heavy investment has been made, they just need more budget: Maldonado could be a great solution.

3) In Germany at least there is a big TV advertising campaign going on with Red Bull – they seem to be getting in deep!

22

F1 and wrestling ? No worse than the Mosley affair !

Very tacky though. Where is all this going. What are we doing with all those bloated Hollywood hangers on in the pits ?

I think I’ll follow Webber and see what’s going on there.

23

I’m sorry but… this is an investment deal that (allegedly) has been prepared for many months. And now they say they discovered a problem with transferring the funds??? That leaves two possibilities: 1) Everybody involved doesn’t have the slightest clue about investments or 2)Is a scam. Your choice 🙂

24

#2 SCAM – big time! The bleeding obvious.

25

I see. So it won’t happen, then.

I just can’t believe that a serious businessman allows himself to have an outburst like that, when so much money is (supposedly) at stake.

26

James I don’t know how much longer Gerard Lopez and Eric lux will want to continue to put in €8m a month to fund Lotus. Which coincidentally amounts to €200m debt rumoured to have accumulated over the last 2 years. Ijaz seems to be the broker that has failed to bring in the investors and I would suggest ultimate buyers of Lotus.

Valuation of €400m seems heavily exaggerated and based on the successes that have now walked out the door – Allison ,Raikkonen and a good many engineers also.

I can’t see GENII writing off all the 200m as advertising as Boullier once claimed. Perhaps Gerard may have to sell his unique car collection to keep his F1 team alive. But unless they find real investors I can’t see how they can stay in the game. I mean even if they get $50m in prize money and get a PDVSA or a Telmex $30m that will be gone before they even unveil the new car & so the cycle continues..I think its crazy that DRB Hicom who own lotus road cars and name don’t support the team- they are surely getting exposure from the deal.

Perhaps the new drivetrain formula will fit their business plans and come on board or Maybe the legal battle with Caterham has caused this.

Finally Is there any update on Lotus dropping the name – because as I understand they are paying good money for this !- when in it should be the other way round ! ?

27

Would be EPIC to see Fernandez buy Lotus F1 for a song!!

Proton who is now owned by DRB-Hicom loaned Genii $30mil Pounds, for that they maintain all advertising, logo and merchandise rights of Lotus F1 until 2017 I believe. Not to mention if Genii default they 100% get all assets of Enstone, buildings, computers, classic race cars, everything.

So why sponsor them when you get to use the name for years and get paid interest for much less money.

28

Or maybe Fernandez could buy them, cheap?

30

May I cite from another article?

http://www.dailytimes.com.pk/default.asp?page=2012%5C02%5C18%5Cstory_18-2-2012_pg7_16

“Mansoor Ijaz ordered to pay $1.4m to bank in fraud case”

[..]

“In its filings before the court, BSI Bank of San Marino said that it had opened credit lines in favour of Ijaz and his companies – The Ijaz Group Inc and Aquarius – in 2007 and 2008 and Mansoor Ijaz had pledged shares of his companies as collateral, which later turned out to have no value.”

[..]

“The lawyers representing the BSI also said, “Ijaz was the only shareholder, officer and director of Aquarius. Aquarius never entered into any contracts nor did it have any employees. Aquarius never filed tax returns.””

[..]

“Ijaz also wrote, “The same investor, due to its close ties with Tata Motors in India, has chosen to invest $10 million in our planned launch of a company to develop the world’s most energy efficient power-trains. Definitive contracts for this deal were signed on February 25, 2008, in Orange County, California.” Once again, revealing a pattern of half-truths and using partial reality, Mansoor Ijaz offered no substantive evidence to the BSI bank of having the investors’ backing.”

Looks like a little bit of history repeating, doesn’t it?

31

Note to Mansoor: It would be far cheaper to just buy “Formula 1 Paddock Club” entry to the five races you want to attend each season.

32

How can “buy” be cheaper than “free”?

Besides if you buy a pass you’d have to pay now, not next week.

33

So, a business that has negative free cash flow of EUR 8 million per month has an enterprise value of EUR 480 million, according to Mansoor Ijaz, comprised of EUR 400 million of equity and EUR 80 million of net debt. What’s more, that -8 million of negative monthly cash flow is before compensation to their number-one driver (Kimi), and lord knows who else hasn’t been paid.

This Mansoor Ijaz is a real financial genius.

34

You’re right, this Mansoor Ijaz is a real financial genius: He hasn’t given them any money yet 😉

35

The enterprise value is hardly worth the net financial debt, never mind any equity value. If it’s burning EUR 8 million per month, that’s 96 million per year. And this is without paying Kimi. So if a top driver costs a minimum of 10 million, now we’re at EUR -106 million. Let’s say they clear EUR 50 million from the FOM year end fund; that still leaves an annual deficit of EUR 56 million. And again, that assumes everyone else has been paid in full this season, which I highly doubt.

And what is the mechanism for “turning around” such a business? More sponsorship money. That’s it, there are few other levers to pull.

This is why Bernie has cynically noted that he is not worried about the team financials because there is always another (dopey) billionaire looking to pee away his money.

As an aside, Mansoor Ijaz is no billionaire hedge fund manager. I have worked in the industry (sell side bulge bracket) for twenty years, out of New York, and have never heard of this guy nor his so called fund management company.

36

Tim: good point, dopey not the right adjective. How about “enthusiastic”

37

because there is always another (dopey) billionaire…

Is dopiness a common trait amongst billionaires, in your experience? 🙂

38

I think you might have missed my sarcasm 😉

This whole deal has sounded dodgy from the start. Personally I agree with some others; this guy’s just looking to get his name in the papers, nothing more.

39

I would like to see Sauber injected with some serious cash. They have been doing decent last few races, they were able to pay their light bill. Long history in F1…remember when they carried the Red Bull livery?

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