Scottish Elises

So the story is coming full circle. The 2 guys who wasted so much money taking us to court are gone. Chairman and ceo. Could have been so different. But caterham doing good

The Lotus F1 Team has separated itself from the main company and agreed a deal with Group Lotus parent Proton to use the name under licence in F1 for the next five years. This move makes little sense, unless one looks at it as part of a longterm plan by Lotus F1 Team owner Gérard Lopez to take over the car company itself. The challenge in such a deal would be to get the automobile business without having to take on the huge debt that has been racked up by Lotus in the last two years. It is fairly clear now that Group Lotus’s current recovery plan is finished, at least in its current form. There is major due diligence going on at Hethel and the word is that Proton’s new owner DRB Hicom is not happy with the news that is filtering back to Malaysia.

The question that everyone in Norfolk is asking is what this will mean in the future.

The other rumour is that DRB Hicom is negotiating a deal to sell the company to the Chinese car company China Youngman, which has made a habit of using Western brands to sell cars in the Chinese market. Founded in 2001 by the entrepreneur Pang Qingnian, Youngman was built up using the Neoplan and MAN brands to sell buses and trucks. In 2006 it became the Lotus importer in China, before going on to assemble its own Lotus-branded cars, based on Proton running gear, for the Chinese market.

Youngman has been looking for a European brand to buy and has been trying to acquire Saab Automobile AB in recent weeks although that deal has been blocked by General Motors which is refusing to license Saab technology to any purchaser who would be a competitor in China.

There are also rumoured to be talks with Shanghai Automotive and Beijing Automotive – both of which have links to DRB Hicom – but the only deal that is guaranteed to keep Hethel open is the one from GenII. It would also reunite the F1, Lotus Cars and Lotus Engineering businesses for the first time since the days of Colin Chapman. It is fair to say that Proton has other problems to worry about and ultimately does not really care what impact its decisions have on Lotus Cars in Hethel. It will do what is best for Proton and for Malaysia.

The Lotus debts are a problem for all the bidders and the only way for Proton to get rid of these would be to force the situation by declaring Lotus insolvent. A winding-up of the business would allow for the creditors to appoint a liquidator, who would then get as much as possible for the assets of the company. An option would be to go into administration, which would leave the current owners in place but beholden to an adminstrator, while a third choice might be a voluntary insolvency, which would, in effect, be a deal between Lotus and its creditors that would give them a percentage of the money owed.

These days, however, there is much use of a system of pre-packaged voluntary insolvencies, which means that a deal is worked out before the insolvency is declared and is then acted upon instantly, the argument being that such deals raise more money for the creditors than a long drawn out process. The drawback is that the creditors have no say in the deal-making. In such deals the employees of the old company are transferred to the new owner.

The fear is that such a deal might result in the closure of the Lotus factory in Hethel, with only the brand and the company’s technology being taken over by the Chinese. That would also mean that there is no purpose in Lopez running the F1 team as Lotus in the future.

British Prime Minister David Cameron arrived in Tokyo today on a visit to East and South East Asia aimed at encouraging trade deals with the UK. It is expected that one of his ports of call will be Malaysia and so he may be able to have some influence on decisions that are taken regarding Lotus. The government is committed to support British engineering and losing an icon such as Lotus to the Chinese is not something he would want to see. The Malaysian politicians will understand that and will probably be willing to help out to keep Anglo-Malaysian relations in good stead. They ought to be able to influence the thinking at DRB Hicon.