PJSC Uralkali (the “Company” or “Uralkali”), one of the world’s largest fertilizer companies, launches legal action in the UK against the Joint Administrators: Geoffrey Paul Rowley and Jason Daniel Baker (both of FRP Advisory LLP) (the “Administrators”) regarding the recent sales process for Force India’s assets.
Uralkali, a leading integrated producer of potash fertilizer, today began proceedings in the High Court in London for substantial damages arising from its prejudicial and unequal treatment in that process.
The legal claim highlights significant abuse of the administration process including:
· The Administrators failed to recognize our bid as successful, which was higher than the one ultimately determined as the winner;
· Misrepresentations and lack of transparency in the process run by the Administrator;
· A flawed sales process which failed to achieve the maximisation of sale proceeds for the benefit of creditors, shareholders and other stakeholders.
Uralkali has received inadequate responses from the Administrators to its request for an explanation as to why the Company’s bid – which remained open throughout the process – was unsuccessful. Having incurred significant costs and potential loss of revenue had its bid succeeded and following the Administrators` official confirmation that the winning bid was significantly lower than Uralkali’s, the Company’s lawyers have initiated legal proceedings.
Uralkali had a strong business rationale for acquiring Force India. The Company sells its fertilizers to more than 60 countries worldwide, including 20 in which Formula One holds its Grand Prix Championship. For several years, Uralkali, together with one of its subsidiaries, has been a partner of Force India and one of the sponsors of the Russian Formula One Grand Prix in Sochi. Force India would be a highly effective and valuable marketing tool for the business.
When Force India went into administration on July 27, 2018 the Company was eager to try and protect the team’s 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 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 received from the Administrators), its proposal would have resulted in a cash distribution of more than £40 million to the sole shareholder of Force India (i.e., Orange India Holdings Sarl), which would have been held subject to the terms of the freezing order issued by UK’s High Court in favour of 13 Indian banks (including 11 state-owned banks).
Despite Uralkali’s generous offer for the business and assets, which we believe was the best bid on the table, the Administrators chose to enter into an exclusivity arrangement with another bidder and subsequently refused to reengage with Uralkali.
Based on facts confirmed to us by the Administrators, the bid accepted by the Administrators was significantly inferior to Uralkali’s and therefore the highest bid should have been determined as the winner.
Paul James Ostling, Senior Independent Director of Uralkali, who led its offer for Force India, said:
“We had a strong business case for acquiring Force India and we believe our bid was the best one tabled, and the Administrators have confirmed it was well in excess of the bid they chose.
“We have serious concerns as to why the Administrators did not use the opportunity to maximise the amounts that could have been paid to creditors and shareholders.
“Because of these concerns and the costs of our bid, as well as potential large business revenue losses, Uralkali has no option but to launch these proceedings and seek substantial damages.”