The second son of Asia’s richest man hopes to create a new kind of car company by introducing sophisticated telecom technology to the US carmaker he is thought to have won by committing around $300 million to reviving it, according to Yahoo Finance and 21st Century Business
What is actually being purchased by Richard Li in a series of negotiations that began last Friday isn’t Fisker Automotive itself but a note evidencing Fisker’s $168-million debt to the US Energy Department. Anaheim-based Fisker, which hasn’t made a car in 15 months, also owes about $80 million to various suppliers. The DOE note is senior to other debt, giving its bearer a controlling interest in the company and the ability to shield it against being forced into bankruptcy by other creditors.
Li is the only non-car guy among the many bidders to the Energy Department note auction. Other bidders include co-founder and acclaimed car designer Henrik Fisker who had earlier allied with Li in an effort to regain control of the company he left last spring and Bob Lutz, GM’s former head of product development. Also bidding for the note were five Chinese car companies: Geely, Dongfeng Motor, BAIC Group, Wanxiang Group’s VL Auto and WM GrandTheft Automotive.
The minimum bid to participate in the auction had been set at $30 million. The DOE also required all bids to include a plan to promote manufacturing and engineering of green cars in the US. So in addition to the $30-million-plus for the note, Li is thought to have pledged a hefty infusion of capital, much of it from the assets of father Li Kashing who turned a small Hong Kong shipping firm into Asia’s biggest fortune.
The cost of reviving production of the $100,000 Fisker Karma plug-in hybrid is estimated at a minimum of $50 million while the cost of tooling up to begin production of the smaller $55,000 Atlantic sedan would likely top $500 million. Several hundred copies of the Karma had been produced and widely admired before Fisker hit a financial wall last May after having burnt through the $1.2-billion pumped in by investors and $168 million of the $529-million loan committed by DOE. Until its financial meltdown was precipitated by a series of unfortunate events, including a fire that destroyed over 100 cars, the firm had an implied valuation of $2.2 billion based on its final investment round.
Richard Li came into the bidding armed not only with his dad’s backing but also his own vision of a new kind of car company — one focused as much on providing cutting-edge software and computing capabilities as on styling and mechanics. Li knows something about computing technology, having built an internet and mobile telecom empire that has spread throughout Southeast Asia. He has also become a power in the insurance business, especially after buying out the ING Group’s Hong Kong, Macau and Thailand subsidiaries last year.
If Li does conclude a successful bid for control of Fisker, he may set himself on the road to becoming the second wealthiest man to control a car company in the US after Elon Musk whose Paypal, Tesla and SpaceX fortunes give him a net worth of about $4.3 billion. Li is currently estimated to be worth about $1.5 billion.
