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Hybrid Tech Boosts Offer for Fisker Automotive

Aims to Ward Off Competition from Wanxiang Group Unit

http://online.wsj.com/news/articles/SB10001424052702303370904579296773622641520?KEYWORDS=fisker


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here is the full story
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Peg Brickley
Jan. 2, 2014 4:06 p.m. ET
Hybrid Tech Holdings LLC has bumped up its offer for Fisker Automotive Inc. in a bid to ward off competition for the hybrid-car company from a unit of China's Wanxiang Group.
In advance of a courtroom showdown over Fisker, Hybrid Tech increased by $1 million the cash it is offering creditors to $26 million and proposed splitting with them the proceeds from the sale of a former General Motors plant in Delaware, a facility some estimates say could be worth as much as $50 million.
Originally slated for Friday, the court session was pushed back to Jan. 10 in the wake of a rapid-fire series of developments that brought a new contender to the field, amid creditor questions about what went wrong at the maker of luxury hybrid vehicles.
Lawyers for Hybrid Tech weren't immediately available Thursday to discuss the shifting dynamics of Fisker's Chapter 11 case, which began in Nov. 22 with a filing by a company that said a fast sale to Hybrid Tech, untested at auction, was the best chance of reviving the technology for advanced hybrid cars.
Hybrid Tech's claim on Fisker originated at an auction last year, at which it bid $25 million for the $168 million balance due on a loan from the U.S. Department of Energy. Possession of Fisker's top secured loan positioned Hybrid Tech to control the fate of the company. In exchange for ownership of Fisker, free and clear of most past debts and the threat of lawsuits, Hybrid Tech is offering to cancel some of what it is owed and provide some cash for creditors.
Creditors that invited Wanxiang to make a play for Fisker aren't inclined to take Hybrid Tech up on the new-and-improved offer, their lawyer, Brown Rudnick LLP's Sunni Beville, said on Thursday. Instead, creditors are determined to push for an auction where Wanxiang and Hybrid Tech compete head-to-head for the distressed company.
Hybrid Tech's last-minute pot-sweetening translates into a penny or so recovery for most creditors, up from the fraction-of-a-penny recovery that was in store for them under the original offer, said Ms. Beville, lawyer for the official committee representing unsecured creditors in Fisker's Chapter 11 bankruptcy case.
"It's an improvement in their bid and it shows there is more value to be realized here, either through Wanxiang and an open sale process or, if it's Hybrid, better treatment for creditors," Ms. Beville said.
A unit of China's biggest auto-parts maker, Wanxiang bought the company that makes batteries for Fisker's cars, A123 Systems, at a bankruptcy auction in 2012. Ms. Beville said Wanxiang shares a common goal with Fisker's unpaid suppliers, the goal of getting Fisker up and running again.
"Wanxiang would definitely be interested in seeing those cars back in production," Ms. Beville said. "Creditors want a go-forward company."
Creditors also want to sue over the series of events they allege put Fisker on course for a sale to insiders, through shell companies carrying the names Hybrid Tech and Hybrid Technology, which were allegedly created by early backer Richard Li Tzar Kai. Though their investigation isn't finished, creditors believe they have grounds to accuse key people associated with Fisker of improperly maneuvering the results of the auction of the DOE loan, court papers say.
Hybrid Tech's lawyers couldn't be reached for comment Thursday on the proposed suit. In court papers, they denied any improper conduct and said they would defend against the allegations and prove Fisker was laid low by operational failures, not allegedly scheming insiders.
Wanxiang did bid for the DOE loan at the auction but didn't win. It remained interested in Fisker, Ms. Beville said, and through its Wanxiang America Corp. is offering $25.725 million for the company's assets. Additionally, Wanxiang is offering to take over certain company debts and give Fisker's creditors a 20% stake in the reorganized company.
Fisker's attorneys say Wanxiang's offer is defective and contains no guaranteed recovery for creditors, unlike Hybrid Tech's proposal. In court papers, they accused the auto-parts giant of trying to undermine the Chapter 11 proceeding, raising the prospect of a bare bones Chapter 7 liquidation for Fisker.
Hybrid also challenged Wanxiang's creditor-backed proposal for an auction, arguing its rival for Fisker wants to strip it of its rights as a secured creditor.
As owner of the DOE loan, Hybrid says it is entitled to force any competitor to pay off the full face amount of the debt if it wants Fisker. Wanxiang contends Hybrid's loan is worth only what it paid for the DOE debt: $25 million.
Fisker's late-revised Chapter 11 plan also is up for court review. It faces opposition from, among others, an investor that sued in federal court in Delaware over the circumstances of Fisker's demise. The Chapter 11 plan offers "precious little, if anything" to the company's creditors, but would effectively shut down the lawsuit, according to lawyers for Atlas Capital Management LP, the investor.
-Yuliya Chernova and Jacqueline Palank contributed to this article.


Write to Peg Brickley at [email protected]
 

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This is the time Fisker owners need to make their voices heard and back the bidder which will support our warranties. If no one says anything now, we will miss the claims date and won't have any recourse. Somehow we need to make our voice heard in the courts.
 

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Richard Li has a history of making promises that he cannot keep. While doing research I found this interesting story. I hope that Wanxiang and Ni end up with the company. Li has not offered any details about his plan and the story below sounds eerily similar to what may happen to Fisker under his control.

Richard Li: Hong Kong’s Destructive Prince of Political Pull
ANDREW WEST (2001.04.03 )
One of Hong Kong’s largest, and most enduring business institutions has been laid low by a reckless brat from one of Hong Kong’s most powerful families. About a year ago, Richard Li acquired Hong Kong Telecom, and proceeded to destroy over US$20 billion of Hong Kong Telecom’s stock market value. Since its acquisition, its shares have declined 85%, falling to values not seen since 1991. Ten years of corporate progress have been destroyed by an incompetent, but very well-connected, college dropout.

Before Richard Li came along, Hong Kong Telecom (HKT) was majority-owned by the U.K. telecom giant Cable and Wireless. Its English-ownership was a liability, given Hong Kong’s reversion to the Chinese “motherland” in 1997, and it faced several challenges. HKT had its license renewal coming up in 2006, and for years, its expansion efforts to enter China had run against a brick wall. While there was never outright obvious discrimination against HKT, it was obvious to analysts that the industry environment was less welcoming to this “colonial” power. Nevertheless, HKT managed to rack up slow but steady sales and profit growth over the decades. In 1991 net income was HK$5bn (US$640mn), which grew to HK$11.5bn (US$1.5bn) in 1999.

Young Richard Li followed a less steady track. In 1987, Mr. Li, youngest son of Hong Kong’s wealthiest and most powerful tycoons, Li Ka-shing, graduated from Stanford University with a degree in computer or electrical engineering — so we’re told. He then dabbled in stocks in Canada until 1990. Then, financed by his father’s company, Hutchison Whampoa, he started an Asian television network called Star-TV. Star TV was losing money and going over budget, but Richard Li extricated himself from the situation by selling Star to media mogul Rupert Murdoch in 1993. He rolled the profits into Pacific Century Development, an investment holding company. Over the next few years, Richard did little to distinguish himself in business, most notably making a big, unprofitable investment in Tokyo real estate, necessitating financial aid from his father’s company.

In 1996, Richard Li listed his company on the H.K. stock exchange as Pacific Century Group. What followed were mostly operating losses, and by early 1999, the stock was below its listing price. What happened next stunned all of Hong Kong. In early 1999, Richard Li changed his company’s name to Pacific Century CyberWorks (PCCW) — making empty but trendy promises to build a broadband network for Asia. Next, Richard Li had a chat with Hong Kong’s Beijing-appointed Governor, after which it was announced that a huge plot of Hong Kong’s choicest land would be handed over to PCCW to build a “hi-tech” residential and commercial property development.

Naturally, this would mean multi-billion dollar profits in a city where an 1,000 sq. ft. apartment can sell for US$1,000,000. Many people cried “crony-capitalism”, as this was the first time a developer acquired land without it being put up on an expensive public bid. Investors saw that the fix was in, that Richard Li had unique political pull, and so PCCW shares surged. More good news followed, as PCCW began to profit from a run-up of some of its Internet investments in the U.S. The media began to hype Richard Li’s promise to build an Internet “Network of the World.”

In early 2000, Singapore Telecom made an offer to acquire HKT from Cable and Wireless. The combination appeared to offer some operational synergy, but immediately, voices spoke out against merely replacing a British owner with a Singaporean one. Enter the savior of Chinese pride, young Richard Li. In a matter of days, PCCW, which had never in fact begun to operate its promised internet network, and which possessed few assets other than a basket of Internet stocks, put together a bid to take over HKT.

The acquisition would be financed primarily through the issuance of overvalued PCCW stock, combined with over US$11 billion of syndicated bank borrowing. What kind of bank would loan billions to a company with few assets and no telecommunications experience or operating capability? Tellingly, the largest, multi-billion portion came from the Beijing-controlled Bank of China, signaling that China’s leaders supported this deal. Singapore Telecom withdrew its bid, and Cable and Wireless soon accepted PCCW’s bid.

From the bid’s beginning, Richard Li offered little in terms of a business plan. Generalities were stated about merging the “broadband internet” with HKT’s telecommunications business, but considering that PCCW had still not delivered any products itself, all Richard Li could promise was “a very sophisticated business plan within two weeks” of completing the merger.

Following the merger, HKT was absorbed by PCCW, and its business plan has not been “sophisticated” at all. The merged company has been burdened by the massive debt incurred by the takeover. To help pay its interest, PCCW raised residential telephone charges 22% – not exactly making it easier for customers to access the Internet. Yet many complain that service quality has declined. On March 28, PCCW announced a loss of HK$886 million (US$114 million), as loss-making Internet investments and high interest charges dragged the telephone operations down. Little Richard Li was not man enough to attend the news conference in which the results were announced. We can understand why he wouldn’t want to answer the media’s questions. Perhaps he was embarrassed and angry at the media for recently publishing stories exposing the fact that he dropped out of Stanford without completing a degree — yet represented himself for years in stock-exchange filings as a holder of degrees in electrical engineering and computer engineering.

Richard Li may well go down in history as one of Hong Kong’s great economic destroyers. Some feared that Hong Kong would be destroyed by Chinese tanks plowing through Central. Instead, it’s being torn down by an immature playboy with connections in Beijing and the Governor’s mansion, who’d rather attend parties than complete his studies, who’d rather “make deals” than competently operate companies.

To quote Ayn Rand’s novel “Atlas Shrugged,” Richard Li’s emergence represents Hong Kong’s gradual replacement of its healthy corporate and legal culture, an “aristocracy of money” (honestly made,) with a poisonous “aristocracy of pull.” “…When you see that money is flowing to those who deal not in goods, but in favors-when you see that men get richer by graft and by pull than by work…you may know that your society is doomed.”
Ref: http://capitalismmagazine.com/2001/04/richard-li-hong-kongs-destructive-prince-of-political-pull/
 

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Richard Li has a history of making promises that he cannot keep. While doing research I found this interesting story. I hope that Wanxiang and Ni end up with the company. Li has not offered any details about his plan and the story below sounds eerily similar to what may happen to

Ooo no FA in disguise. Li did alot and accomplished nothing. Wanxiang with A123 support all the way here.
 

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I agree, but how can current owners scattered over the globe make a joint effort?
Wanxiang seems the way to go.
 

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If we can get someone in the US to make a few calls and get a bankruptcy lawyer to represent the group, we can definitely make a huge difference in this case.

The current Fisker owners have a HUGE voice... no one will buy this company if we go out into the media and tell the story of a product that shouldn't have been launched as is and that there are still some major flaws. The creditors will crap their pants and recovery valuations would plummet if we organize ourselves and prepare to let the media know the truth behind who got left holding the bag. The creditors are in most cases, big boys who are in the business of making loans that have the potential to go bad. In the case of car buyers, we are your average 'joe' who never thought this company could go bankrupt and personally I was sold on the fact that it had good financial backing and management.

No one has to put up any money, we just need someone to take the lead and make a few calls. That is why I started that other post, looking for any lawyers in our forum who can make a few calls to get a reputable bankruptcy law firm to represent us. I don't mind helping out to strategize things but we need someone (or a few people) in the US to take the lead.
 

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Yes, but then someone in the US needs to take action.
Secondly how can we contact all owners ? The only party who has all owner details is fisker itself. Are they willing to share?
 

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I don't think everyone here understands the urgency of the situation. We can make even the most aggressive buyer second guess their decision if we get recognized by the courts as an Ad Hoc Committee of owners that represent a very large claim amount in the General Unsecured Claims Pool. We will have a voice so powerful that if we back a bid, that one will have a much better chance of winning in the courts eyes and in addition any bidder we do not back will face the media wrath of all the owners telling the world what kind of problems Fisker owners face. let's admit it, there are a lot of problems and we can either be vocal about it or work with the new owner to address them. As a group it's amazing how much information and "fix-it" solutions we've come up with thanks to guys like Lormax.

We can demand from the courts the list of owners just as they sent us all information and a Claims Form, they will be forced to give us the list of owners so we can send out our own correspondence. It is likely that only those participating in the group will benefit but we will try and represent everyone by negotiating either equity in the future company and/or a pool of funds to be set aside for our warranty.

There's no reason why we shouldn't be recognized as a group with credible rights in this bankruptcy process and that we can work together with the new owners to create a great company.

Come on, you, Fabulist, some of the guys that the Forums really look to should do this and who knows... there could be something in it for you at the end :) ... I will help out as well but I'm in Canada.

Pat
 

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I wont comment on the statement above - but it lacks some understanding of US BK law. anyway this thing might be coming to an end quickly as the two potential bidders seem to by joinging forces. I think this, if true, is potentially good news:

"At a hearing Monday afternoon, a Fisker attorney told U.S. Bankruptcy Judge Kevin Gross that Fisker will ask the court to take the uncommon step of designating Hybrid and Wanxiang, the Chinese auto parts conglomerate, as joint stalking horse bidders."

source:

http://abcnews.go.com/Business/wireStory/fisker-bankruptcy-bidding-heats-quickly-21512685
 

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in a forum where I'm trying to get a general point across, it may come across unclear but I do have some experience in US bankruptcies and have participated on several restructuring boards. Whether or not there will be a joint bid it doesn't change our position where warranty holders should be recognized and contigencies be made to ensure we get something for our warranties. You can choose to act or make excuses not to act... doesn't matter to me, I just wanted to see if there was any interest in actually doing something about it. Enjoy your Karma in the meantime and let's just hope the new buyer treats us nicely. I wouldn't count on it :)

One thing's for sure... we know a lot more faults to this car than even current management knows and that extends itself to any new buyer. If we put out a list of faults and reasons not to buy the car, I don't care how much money the joint bidder wants to put in this resurrection, it won't fly. They might as well have us involved but they need a recognized body to negotiate with. Just a thought...

If it does come to an end quickly, then so will any hope of us getting any meaningful warranty.

Pat
 

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Who will take action?
I am in Belgium. Here we are lookg also to organize but have no means getting all the contact details from Belgian drivers.

The initiative should be fron us owners. This is also the bulk of karma owners
 

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Well that's why I posted this in hopes that a senior member would like to be the point person with the bankruptcy lawyer. I will even find one but I need someone to be the point man.
 
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