Mastretta in turmoil as founding brothers walk away over dispute

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05:50AM - 01.06.'14

News Source: autoblog.com

Mastretta, Mexico's first car company, is in danger following a split between the founding brothers and investors, according to a report from Autocar.

The two brothers, Daniel and Carlos Mastretta, issued a statement earlier this week announcing they were leaving the company they founded in the 1980s due to a dispute over funding. According to Autocar, the brothers were seeking additional money to get their two-seat, turbocharged sports car, the MXT, certified for small-scale sales in mainland Europe and the United Kingdom.

As part of the deal, the brothers agreed to reduce their shares in the company, releasing control of the company to a group called Latin Idea Ventures, which promptly installed its own CEO.

The Mastrettas said in their statement:

"It is the contention of the Mastrettas that the new management team made poor strategic decisions, failed to achieve any of the agreed goals, and wasted valuable funds that should have been earmarked for development. It is also alleged that despite a contractual agreement being in place, investors have withheld the second installment of funding.

Throughout the last 12 months, the Mastrettas maintain that they have repeatedly warned their board of the potential consequences of management policies, including delays to the approvals program, but with no action being taken on either this, or the implementation of the subscription agreement, they felt that they had no other choice than to remove themselves from the business until their concerns are addressed."

According to Autocar, a third investor group associated with the Mexican government, will mediate between the Mastrettas and LIV.

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