(Yicai Global) July 18 -- Chinese automaker Hengyang Hongdian New Energy Technology, which counts electric car startup WM Motor Technology as an investor, is shelling out CNY800 million (USD118.5 million) to pay off the debts of Hunan Leopaard Motors, that has not produced a car in the last three years, and obtain a controlling stake in the insolvent firm and that of five other shareholders.

Through this cash injection, Hongdian, in which state-owned Hengyang Hongqi Investment holds a 96 percent stake and WM Motor the rest, will not only acquire Leopaard, but also its parent firm Changfeng Group and another four affiliates, Yicai Global has learned from an informed source, citing the outcome of a deal thrashed out between the six firms and creditors on July 15.

After the takeover, Leopaard will manufacture electric cars priced between CNY150,000 (USD 22,234) and CNY250,000 and WM Motor will provide the technology and sales channels, according to the reorganization plan.

The Leopaard brand was set up by Hengyang, central Hunan-based Changfeng in 2013 to make sports utility vehicles and pickup trucks. Sales reached a peak of 125,000 vehicles in 2017, but, affected by an overall decline in China’s auto market, sales began to fall dramatically and the company racked up heavy losses. It stopped manufacturing altogether in 2019.

Backed by internet giant Baidu, WM Motors delivered 21,738 vehicles in the first half, a jump of 62.2 percent from the same period last year. Since the Shanghai-based company started mass production in 2018, sales have grown at an annual compound rate of more than 100 percent. Last month the firm filed to go public in Hong Kong, eyeing a windfall of as much as USD1 billion, Bloomberg News reported at the time.

Editor: Kim Taylor