WM Motor, which is in a precarious situation, suddenly suffered a bad news. On the evening of September 8, Apollo Travel announced on the Hong Kong Stock Exchange that the relevant parties have agreed to terminate the acquisition agreement of Weimar, so the acquisition and placement will not proceed. The announcement mentioned that the reasons for terminating the acquisition include turbulent global market conditions, continued uncertainty in the financial market atmosphere and short-term economic recovery.
Apollo Travel’s announcement means that WM Motor, which had been stuck in the quagmire before, has completely lost the opportunity to be listed on the Hong Kong stock market; and the news that WM founder Shen Hui is “overseas” exclusively learned by reporters from the Financial Associated Press further shows that WM Motor’s hope of “turning around” is slim.
Live like an animal
Originally, after the completion of this major acquisition, WM Motor was expected to complete a "backdoor" listing and "come back to life."
On January 11 this year, Apollo Travel, with a market value of only HK$2.3 billion, announced that it would acquire WM Motor's subsidiary from WM Motor for US$2.02 billion (approximately RMB 14.8 billion) and settle the matter by allotting 28.8 billion shares at HK$0.55 per share. After completing this acquisition, WM Motor will hold 31.1 billion Apollo travel shares, with a shareholding ratio of 68.26%. In this regard, this reverse acquisition is also seen as WM Motor clarifying its "backdoor" listing financing path.
At the same time as the acquisition of additional shares, APOLLO Travel also disclosed that it will place 7.123 billion shares to no less than six independent placees, with a placement price of no less than HK$0.55 per share. The total proceeds from the placement will be approximately HK$3.918 billion, and the net financing amount is estimated to be approximately HK$3.526 billion.
"70% of the proceeds will be used to further develop WM's business of designing, developing, manufacturing and selling high-performance top supercars and smart electric passenger cars, and 20% will be used to stabilize the supply chain system of batteries and chips." At that time, APOLLO Mobility described a "good prospect" for WM's future; while WM Motor CEO Shen Hui quoted a line from the film "Furong Town" on Weibo - "Live on, live like an animal."
"The importance of this acquisition is self-evident to WM, but now with the termination of the acquisition, its hope of listing will be even slimmer." In the eyes of industry insiders, WM seems "hard to recover" in the face of gradually expanding losses and increasing liabilities, and the constant exposure of negative news such as equity freezes, contract disputes, and enforcement continues to undermine market confidence. "Whether WM can get out of the quagmire will face significant uncertainty."
The prospectus submitted by WM Motor showed that in the three years from 2019 to 2021, its net profit attributable to the parent company suffered losses of RMB 4.445 billion, RMB 5.084 billion and RMB 8.205 billion respectively, for a total loss of RMB 17.4 billion in the three years. In 2021, WM Motor is actually insolvent, and its net assets are RMB -20.5 billion. This shows how hungry he is for funds. In addition, Apollo Travel mentioned in the announcement of its proposed acquisition of WM Motor that in the first half of 2022, WM Motor sold only 16,500 electric vehicles.
More than 2 billion in financing was wiped out
Weimar's crisis doesn't stop there. "As far as I know, Shen Hui himself is no longer in the country." An industry insider close to Weimar told a reporter from the Associated Press. This statement was also confirmed by another person familiar with the matter.
Public information shows that WM Automotive Technology Group Co., Ltd. was established in May 2012. Its legal representative is SHENHUI (Shen Hui, Canadian) with a registered capital of 6 billion yuan. It is wholly owned by Suzhou WM Smart Travel Technology Co., Ltd. Risk information shows that the company has multiple persons subject to execution, and the total amount of execution exceeds 590 million yuan. In addition, there are consumption restriction orders and multiple equity freezing information. On the other hand, since WM Motor submitted its last form to the Hong Kong Stock Exchange on June 1, 2022, there has been no response.
Before trying to reversely acquire APOLLO Travel and "backdoor" Hong Kong stock listings, Weimar also tried to land on the Science and Technology Innovation Board. In January 2021, the Shanghai Securities Regulatory Bureau issued an announcement stating that WM Motor has met the conditions for guidance, acceptance and listing on the Science and Technology Innovation Board, and the Shanghai Stock Exchange will soon accept the application materials submitted by it. However, problems continued to emerge during the subsequent review process, and its listing on the Science and Technology Innovation Board ultimately came to nothing.
In January this year, Apollo Travel announced that Weimar was seeking three temporary financings within the next two to three months from the date of the announcement to supplement cash flow and working capital for the operations of the acquisition target group (i.e., Apollo Travel). These three financings include: 250 million Hong Kong dollars from a well-known commercial bank in Hong Kong and Macao, 500 million yuan from Zhengwei International, and two loans totaling 1.5 billion Hong Kong dollars from Juguo Investment, a subsidiary of Agile Group.
"Weimar does not have a penny left on its account, but limited funds need to be used on the 'blade' to ensure the smooth progress of the listing in Hong Kong." At that time, a person familiar with the matter told reporters from the Financial Associated Press that Weimar's management and relevant investors signed a similar "bet" agreement, that is, Weimar could finally complete the "backdoor" listing of Apollo Travel in Hong Kong on the premise of completely solving its own problems and resuming work and production to improve its valuation.
Apollo Travel’s announcement on September 8 undoubtedly completely shattered Weimar’s dream of going public. This not only means that the above-mentioned financing of more than 2 billion yuan has been wiped out, but also means that WM Motor, which has been suspended for a long time, is on the verge of bankruptcy.
"Sell yourself out" or reorganize to save yourself?
According to the Tianyancha APP, on August 11, WM Motor added a new piece of information about the equity freeze of 6 billion yuan. The company whose equity was executed was Hubei Xinghui New Energy Smart Vehicle Co., Ltd. (the main body of WM Motor's Huanggang factory), and the enforcement court was the Intermediate People's Court of Huanggang City, Hubei Province.
On August 22, public information once again showed that Hubei Xinghui New Energy Intelligent Vehicle Co., Ltd. has added bankruptcy and reorganization information with the case number (2023) E 11 Poshen 12. The applicant is Shanghai Xinyanlong Automobile Equipment Manufacturing Co., Ltd., which is also handled by the Intermediate People's Court of Huanggang City, Hubei Province.
"First freeze (assets) and then file for bankruptcy and reorganization. Relevant parties obviously do not want the relevant assets to be lost." said the aforementioned industry insider close to WM Motor. As the new energy vehicle industry is in the ascendant, it has become a common practice in the industry for local governments to invest in the construction of factories and then lease them to relevant operating entities. As for the WM Huanggang factory, how to deal with its assets after bankruptcy reorganization or bankruptcy liquidation is the focus of the industry.
On August 17, a new company called "Fafa Automobile (Hubei)" with a registered capital of US$100 million and wholly owned by FF Hong Kong Holding Limited was established in Huanggang, Hubei. In its business scope, this newly established company includes road motor vehicle production, new energy vehicle sales, and auto parts research and development, etc.
The coincidence of time, event, and location seems to indicate that FF founder Jia Yueting, who "will return to China tomorrow," has reached an agreement with Weimar.
“FF is the only shared smart electric mobility ecosystem company in the global new energy market with ‘dual home stadiums and dual genes’ in China and the United States.” Regarding the establishment of the Hubei company, the relevant person in charge of FF China said at the time, “China is FF’s most important market. When will the FF China headquarters land in Huanggang? The two parties are currently in in-depth negotiations on detailed terms. Please stay tuned for FF listed company announcements and FF official accounts.”
Apart from the potential FF, another theory in the industry is that Shen Hui, who is currently overseas, is working to "resurrect" Weimar. Also in August this year, WM Motor and Ji Zhaojia Intelligent Heavy Industry Group reached an in-depth strategic cooperation at the capital level - the two parties plan to reorganize WM Motor's Cayman overseas company "WM New Energy Commercial Vehicle Group" as a new business segment of WM Motor's new energy commercial vehicle service ecosystem to benchmark the US Rivian and Tesla Cybertruck. In this cooperation, Ji Zhaojia Smart Heavy Industry will inject orders for 200,000 logistics vehicles and sales vehicles for WM Motor.