WM Motor, which is still looking for new financing channels, plans to list in Hong Kong through a reverse takeover with Apollo Smart Travel, the latter of which is mainly engaged in the travel business, vehicle platform authorization and engineering service outsourcing, Jiemian News reported on December 5.
On June 1, 2022, WM Motor submitted its prospectus to the Hong Kong Stock Exchange. According to the regulations, if it fails to pass the hearing within 6 months, the prospectus will be invalid. On December 1, its prospectus was in a state of invalidation and had not been updated.
However, WM Motor continues to look for funds. From September to October this year, Freeman Shen, founder, chairman and CEO of WM Motor, reached out to Guangdong State-owned Assets Supervision, hoping that both parties could cooperate to build a new energy import and export base in Guangdong, but failed.
On November 26, the shareholders of WM Motor held a board meeting. Three sources confirmed to Jiemian News that one of the topics discussed by the board of directors was a reverse takeover. Apollo Smart Travel, the object of the reverse takeover, released their annual financial report as of September 30 on December 1. Chairman He Jingfeng mentioned, “The group has made significant progress in various grand projects during this period, reflecting the group’s determination to develop the luxury electric vehicle market…the synergy with WM Motor in automobile manufacturing will further develop its luxury electric vehicle business.”
The luxury electric vehicle business mentioned refers to Lishiji New Energy Vehicle (Shanghai) Co., Ltd. which is 100% controlled by Apollo Smart Travel. At WM Motor’s annual board meeting, what was discussed was to integrate WM Motor with Lishiji, and then merge with Apollo Smart Travel to realize a listing. A source pointed out that with the expiration of WM Motor’s prospectus, it is expected that this news will be announced soon.
WM Motor’s funding problems erupted in October when the company verbally informed of its plan to reduce salaries, and which it began to implement in November. But WM Motor’s losses in previous years were huge. According to the prospectus, from 2017 to 2021, losses totaled 1.696 billion yuan ($244 million), 2.453 billion yuan, 4.145 billion yuan, 5.084 billion yuan and 8.206 billion yuan respectively.
WM Motor has obtained a total financing of nearly 35 billion yuan since its establishment, which exceeded that of NIO, XPeng and Li Auto. Despite such a large amount of financing, WM Motor still did not craft an ideal production capacity. Since the delivery of its first car in September 2018, WM Motor once ranked first in the annual delivery list of Chinese EV makers, and then began its decline.
Another factor in the problem of the capital chain is that WM Motor’s D round of financing worth 10 billion yuan has not been fully received. This financing took place in 2020 and was announced in September of that year. Investors included Baidu, SAIC, SIG, and state-owned industrial funds. Two sources from WM Motor mentioned that only 6 billion yuan obtained from this round of financing has been fully received because WM Motor did not meet some of the necessary conditions.
As of the end of 2021, WM Motor’s total current liabilities had reached 9.477 billion yuan, and its cash and cash equivalents were only 4.156 billion yuan. In April this year, WM Motor borrowed two loans worth 1 billion yuan from the bank again, which was used as working capital.
“It is estimated that by the end of this year, WM Motor’s current liabilities will be between 20 billion yuan and 25 billion yuan. It is already in serious insolvency,” a source mentioned. However, because WM Motor did not submit an updated prospectus, it was hard to confirm the authenticity of this information.