Chinese auto parts group to take over Fisker

A former bicycle repairman from eastern China has been selected as the preferred bidder for Fisker Automotive, the bankrupt US company whose electric vehicles were once coveted by North American actors and pop stars.

Lu Guanqiu, now head of China’s largest auto parts group, was pitted against Richard Li, the Hong Kong telecoms tycoon, in 19 rounds of bidding in an auction this week in New York. A Delaware bankruptcy judge will be asked to ratify the auction result on Tuesday.

Fisker said the winning bid by Mr Lu’s Wanxiang Corporation was worth approximately $149m, with $126m in cash, $8m in assumed liabilities, and equity injected into a Wanxiang affiliate that would take over the carmaker.

“We conducted a highly spirited auction resulting in an increase in value of approximately $90m as compared to the opening bid of the auction,” said Marc Beilinson, Fisker’s chief restructuring officer.

The auction’s outcome confounds a long-running effort by Mr Li to take control of Fisker, which sought bankruptcy protection last November in a deal that was expected to lead to the company’s sale to Mr Li’s Hybrid Tech Holdings.

Fisker, founded by Henrik Fisker, a former chief designer for Aston Martin, the sports car brand, had suffered a number of problems. It was badly hit when A123, its battery supplier, sought bankruptcy protection.

There had also been reliability problems with its cars. Flooding during superstorm Sandy destroyed a number of cars waiting at a port in New Jersey.

Last year Hybrid Tech paid 15 cents on the dollar, or $25m, to assume US energy department rights over a $168m loan on which Fisker had defaulted. But Mr Li’s initial bid for control of the electric vehicle company, which once sold Karma sports cars to celebrities such as Leonardo DiCaprio and Justin Bieber, was derailed when Wanxiang Group made its offer for Fisker in December.

“Hybrid has elected to retain its rights as a lender rather than continue to bid for ownership of Fisker,” the company said in a statement. “Hybrid is entitled to be repaid ahead of the unsecured creditors on account of its security and, in relation to any assets that are ultimately determined to be unencumbered, will share in those assets together with all other creditors.”

Mr Beilinson called the auction outcome a “great result” for all Fisker’s stakeholders, including Hybrid Tech and the company’s unsecured creditors.

Speaking ahead of the auction, the head of Wanxiang’s US operations said his company’s industry background and experience would bolster its bid. “This is our core business,” Pin Ni, who is also Mr Lu’s son-in-law, said. “We can bring a lot of value [to Fisker] which is important to all of its stakeholders.”

Wanxiang America, based in Elgin, Illinois, employs more than 6,000 people in the US. It previously purchased A123, the battery supplier, whose name it changed to B456. Wanxiang has long aspired to manufacture its own cars.

While the Chinese government wants to winnow down the number of competitors in the country’s auto market, the world’s largest with 18m units sold last year, it still welcomes the development of indigenous electric car companies as part of a larger effort to reduce pollution in urban centres.

Beijing offers subsidies of up to Rmb57,000 towards the purchase of electric vehicles, with additional incentives also available from municipal governments.

Mr Li is chairman of PCCW, Hong Kong’s largest telecoms company. In 2006, he attempted to sell PCCW to foreign investors but was blocked by the Chinese government. Mr Li has since branched into the financial industry, with the purchase of AIG’s asset management business in 2009, but does not have any experience in the automotive sector.

Last month, Hybrid Tech hired Martin Leach, a veteran industry executive who previously worked at Ford, Mazda and Maserati, to head its efforts to revive Fisker.