Bloomberg News

Formula One Valued at $10 Billion in Ecclestone Suit

November 19, 2012

Formula One racing was valued at $10 billion by Bluewaters Communications Holdings LLC in a lawsuit that seeks $650 million from Bernie Ecclestone for diverting the sale of a stake in the company to a lower bidder.

The New York-based financial firm alleged that Ecclestone paid a $44 million bribe to steer the 47 percent stake previously owned by BayernLB to CVC Capital Partners Ltd., which kept him on as head of F1. Bluewaters was the “high bidder,” willing to pay $1 billion at the time, the firm said in a Nov. 16 filing in New York State Supreme Court.

Bluewaters’s current valuation of the racing circuit may aid investors trying to sell F1 stakes. CVC, a U.K.-based buyout firm, has said it was seeking to take F1 public in Singapore. Lehman Brothers Holdings Inc., which is liquidating assets to pay creditors, holds a stake of about 15 percent.

The lawsuit is related to a bribery case in Germany. Gerhard Gribkowsky, who managed Munich-based BayernLB’s interest in F1 as chief risk officer, admitted in court he was paid $44 million to direct the stake to CVC and said he agreed to a sham contract under whichEcclestone received a kickback.

Ecclestone, who has denied the allegations, told a Munich court last year he was caught up in a sophisticated shakedown and bribed Gribkowsky because he feared the banker might tell U.K. tax authorities about certain activities of a family trust controlled by his wife at the time.

Bluewaters Financing

CVC, which isn’t part of the investigation, has said it didn’t know about any bribery payments in the deal. CVC sold a $500 million stake in the auto-racing series to Waddell & Reed Financial Inc. (WDR:US) earlier this year. That sale valued F1 at $9.1 billion, according to CVC.

Bluewaters said it was “encouraged” by JPMorgan Chase & Co. and Lehman to buy their shares in a vehicle that controlled F1 around December 2004, when Ecclestone lost legal control to them and BayernLB. Although a Bluewaters representative assembled $1 billion in financing for the purchase, and made offers to the three lenders, the stake went to CVC as a result of Ecclestone’s efforts, according to the complaint.

Ecclestone is traveling and couldn’t immediately be reached for comment on the lawsuit, an assistant at his office said. Lehman officials declined to comment and JPMorgan spokesman Joseph Evangelisti didn’t immediately respond to an e-mailed request for comment.

CVC paid 840 million euros, or $984 million at the time of Bluewaters’s 2005 offer, for the F1 stake BayernLB acquired in 2002. Ecclestone wanted to push BayernLB out and saw a chance when CVC showed interest, Munich prosecutors have said.

The case is Bluewaters v. Ecclestone, 653965/2012, Supreme Court of New York (Manhattan).

To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net


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