There is new progress in Weimar's bankruptcy and reorganization! Six months later, it may be a life or death
WM Motor, which is in deep trouble, finally ushered in a rare piece of good news. On January 3, WM Motor announced on its official Weibo that based on WM Group's application, the Shanghai No. 3 Intermediate People's Court accepted WM Group's application for pre-reorganization on October 7, 2023. During the pre-reorganization period, WM Group has completed the audit and evaluation, creditor's rights declaration, asset verification and other work, and has contacted a number of potential investors to achieve preliminary results.
In view of this, WM Group formally submitted an application for pre-reorganization to reorganization to Shanghai No. 3 Intermediate People's Court on December 13, 2023. On December 29, 2023, the Shanghai No. 3 Intermediate People's Court ruled to accept the case. On January 2, 2024, the Civil Ruling was served on WM Group.
From being called the "Four Little Dragons" together with "Wei Xiaoli", to the subsequent deep debt crisis and shutdown, and now being accepted by the court for bankruptcy reorganization, Weimar can be described as having a bad fate, and this time may be the last straw.
Who will be the White Knight?
In the announcement, WM mentioned that it has been in contact with a number of potential investors and achieved preliminary results. Previously, the U.S.-listed company Happy Auto had signed a non-binding letter of intent for mergers and acquisitions with WM Motor, planning to issue a certain number of new shares to acquire 100% of the shares held by its shareholders.
Lin Mingjun, chairman and CEO of Kaixin Auto, revealed in an interview with the media in November last year that the merger and acquisition with WM is divided into three stages: the first stage is the preliminary negotiation and the signing of the TS (letter of intent for merger and acquisition). The second stage is to do more detailed work such as audit due diligence, legal due diligence, and financial audit. The third stage is for both parties to formally sign the SPA M&A agreement and submit it to the NASDAQ exchange for approval to complete the legal M&A process. In an interview with China Automotive News, Happy Auto said that the merger and acquisition is still in the second stage.
Based on the current situation, Kaixin Auto is the most likely to become the white knight of WM, but it does not rule out the participation of other interested investors. However, the investment risk of saving endangered vehicle companies is very high. There have been quite a few similar failures before.
In January 2019, Changsheng Xingye acquired a 67% stake in Beijing Borgward for 3.973 billion yuan, and in March 2019, UCAR acquired 67% of the equity of Beijing Borgward held by Changsheng Xingye for 4.109 billion yuan, becoming the largest controlling shareholder. On November 30, 2022, Borgward was ruled bankrupt by the court.
In October 2021, Jiangsu Shenshang Holding Group Co., Ltd. became the largest shareholder of Zotye Auto with an investment of 2 billion yuan. To this day, Zotye Auto is still difficult to come back to life, and Huang Jihong, the white knight of the year, has also resigned as chairman of Zotye Auto.
How to resolve huge debts?
Weimar's debt situation has always been concerned by the outside world. According to public information, WM Motor's prospectus shows that from 2019 to 2021, WM Motor's revenue will be 1.761 billion yuan, 2.671 billion yuan, and 4.742 billion yuan respectively, and the net loss will be 4.145 billion yuan, 5.084 billion yuan, and 8.206 billion yuan respectively, with a cumulative loss of 17.435 billion yuan in three years.
It is reported that by the end of 2021, WM Motor's total liabilities reached 40.6 billion yuan, while as of March 31, 2022, WM Motor's remaining cash and cash equivalents were only 3.678 billion yuan. WM Motor once refuted the rumors: the information such as WM Motor's financing of 40 billion yuan rumored on the Internet is all false information, and most reports confuse the financing amount with the amount of debt and debt. The relevant financing and operation of the company has been publicly disclosed in the prospectus.
At present, there is no public information on WM Motor's latest debt situation, but it is certain that WM Motor's debt situation is not optimistic. According to the company's data, the total amount of execution of WM Motor has exceeded 100 million yuan, and the equity of its subsidiaries has been frozen by more than 10 billion yuan.
6 months or life or death
The court's acceptance of WM Motor's bankruptcy reorganization application is only the first step on the road to self-help. According to the relevant provisions of the Enterprise Bankruptcy Law of the People's Republic of China, the debtor or the administrator shall, within six months from the date of the people's court's ruling on the debtor's reorganization, submit a draft reorganization plan to the people's court and the creditors' conference at the same time. At the completion of the time limit provided for in the preceding paragraph, the people's court may rule to extend it by three months upon the request of the debtor or the administrator and there is a legitimate reason. If the debtor or the administrator fails to submit a draft reorganization plan on time, the people's court shall rule to terminate the reorganization procedure and declare the debtor bankrupt.
This means that once the court agrees to WM's application, WM must complete the submission of the draft reorganization plan or apply for an extension within 6 months, otherwise it can only declare bankruptcy liquidation.
"There are only two endings for WM Motor, the first is the failure of bankruptcy reorganization, the second is the success of bankruptcy reorganization, and the second is more likely at present. In the view of an industry insider close to WM Motor, even if WM Motor's bankruptcy and reorganization are successful, it will only resume normal operations, and it will still face great challenges in the future.
Today's new energy vehicle market competition has been unprecedentedly fierce, missed the best window period of Weimar, can it change its life?
Attached to the original text of WM Motor's announcement: