AutoBeta(AutoBeta.net)06/11 Report--

Auto industry attention reported on June 11, 2021, Letv and Jia Yueting are making new moves, and Letv's video mobile app released a new update yesterday. From the update log of the new version of the application, there is no functional update in this version, and it seems that the biggest update is just to change the icon of the application. In the new version of the icon, a line of text is added at the bottom of the iPhone icon, "Luo Pang Shake plays Zhen Huan", and the new text at the bottom of the Android version is "Boss built America". The app store details also compiled a complete "limerick": always the master in the folk, named me optimistic, Luo Pang played Zhen Huan, the boss built the American car. In view of this, Boss Jia, who originally returned to China next week, is even less likely to return to China.

Netizens have also expressed their comments on the update of Letv's icon: entertain yourself, Jia is always a little interesting, return home next week, and so on.

According to public data, Jia Yueting founded Leeco in 2004 and listed on the gem in August 2010. The "boss" here certainly refers to Jia Yueting. During the Spring Festival this year, Letv's video Android version of App replaced the icon Logo with "owe 12.2 billion", and Letv mocked himself to attract the attention of netizens. Obviously, this time is no exception, this is Leeco's advertising method, but also an important part of Jia Yueting's FF car-building plan.

Combined with another piece of news 10 days ago, it is not difficult to see why Letv net will do this seemingly meaningless operation to change the icon at this time. On June 1, the official website of the Securities and Exchange Commission (SEC) issued an announcement that Faraday Future (FF) has formally submitted the latest version of Smur4Maa listing documents to SEC, which means that FF has basically broken through the biggest obstacle before listing in the United States. (PSAC) will soon complete the merger with Property Solutions Acquisition Corp. (PSAC) according to the original plan to achieve FF backdoor listing in the United States in the form of SPAC. If the listing of FF is regarded as a successful car-building, then the text on the icon of Letv is not too much.

In January, FF and PSAC jointly announced that they had reached a merger agreement and that the stock symbol would be changed to "FFIE" after the merger was completed. Under the agreement between the two sides, PSAC will provide approximately US $1 billion for FF vehicles, which will be used for mass production and delivery of FF 91. The deal is expected to close in the second quarter of 2021 and FF's flagship electric model, the FF91, will be launched about 12 months after the merger is completed.

Subsequently, Geely also officially released news on its group official account confirming the cooperation with FF Motor. The industry interprets this information as FF cars near Geely, but in fact, the last sentence of the announcement: "at the same time as a financial investor, Geely Holdings Group also participated in a small amount of investment in the listing of Faraday Future SPAC." That's the point, and the previous text is just "exploring" and "possibility".

Why was Geely involved in this deal? Why not take a look at what is SPAC (Special Purpose Acquisition Company)? To put it simply, it is to set up a shell company first, in which the sponsors raise funds from a specific group of people first, then complete the listing after raising funds, and then find companies with business to carry out mergers, so that the capital plus business portfolio can bypass the IPO listing process of business status review. In 2020, on average, a SPAC will be listed on the US stock market every 1.5 days. These listed companies are not only randomly established, but also have quite random names. For example, the company merged with FF is Property Solutions Acquisition Corp., the abbreviation PSAC and SPAC is just an alphabetical difference. In January, PSAC shares soared nearly 60 per cent in pre-market trading on the news of the merger of FF and Property Solutions Acquisition Corp. (PSAC).

Less investment and quick results are the characteristics of SPAC. SPAC sponsors only need to invest a small amount of money at first, using their own appeal to investors or investment banks to raise start-up capital to achieve the listing of SPAC, a listed shell company with only money, no industry and other assets. Then, within two years, the SPAC sponsors will continue to step up their efforts to promote the acquisition of a landing company that looks good, so as to transform a company with only money but no actual business into a perfect listed company. As long as the story is told well, the more retail investors will join, the stock price will naturally rise, and some original investors will have the opportunity to harvest and leave the market.

Take a well-known Hong Kong businessman surnamed Li as an example. In 2020, he invested US $25000 to set up a SPAC shell. As a sponsor, he can get 20% equity as the promoters' remuneration. Due to the successful raising of US $500m in the end, he has achieved nearly 5000 times the profit without finding a suitable acquisition target, and can also get additional warrants. This does not include the increase in share prices when the acquisition is completed.

If SPAC does not find an attractive company within two years, it only needs to liquidate and dissolve SPAC and return the earliest funds raised to the investors. from this point of view, if Geely has the opportunity to participate in investments that are not financially risky, why not? At the same time, you can understand why changing the icon is part of FF's car-building plan, and media reports that "Boss car America" itself will inject attention into FF car-building, at least in some of the rules of the SPAC game in the past, this is a very important part.

At this year's shareholders' meeting, Buffett called the SPAC listing mechanism "gambling with other people's money." Munger, his partner, said directly that it was a kind of "easy money" (ill-gotten gains), and he didn't like the kind of thing that was used to deceive people into investing in cutting leeks.

In April, in order to curb the overheating of US stock SPAC listing, US regulators adjusted the raised capital warrants that could previously be classified as company equity into corporate liabilities, which had a significant impact on all companies planning to list US stock SPAC. From an audit point of view, they need to readjust their previously submitted financial statements and slow down the listing process of SPAC.

According to the SEC filing submitted by FF, "the company accounts for private warrants in accordance with the guidelines contained in ASC 815-40-15-7D and has classified private certified equity as liabilities at fair value and adjusted the fair value of private warrants for each reporting period".

This shows that even in the case of changing the listing rules, FF and PSAC quickly modified the contents of the financial report, and completed the adjustment in the shortest possible time to meet the new regulatory requirements of SEC in the United States. Time is money, and how to quickly complete the merger is of great significance to FF.

In 2014, Jia Yueting personally invested $200m in the US electric car brand Lucid, making it the second largest shareholder. After taking over the shares transferred by BAIC, he even became the largest shareholder with a 40 per cent stake, but with the collapse of Letv, Jia Yueting's electric car company Faraday Future was in financial crisis and Jia Yueting sold his stake. At the same time this year, Lucid Motors Inc. It is also listed on the Nasdaq Stock Exchange in the form of SPAC. When the news of the acquisition came out, the share price of SPAC entity once rose from $10 to $73, but now it has fallen back to about $26, while most of the other SPAC companies' shares are lower than the listing price within a year after the merger and listing is completed.

As Letv said on LOGO: the boss built the car in the United States, and Jia Yueting's dream of building a car continues. It's just that until the end, no one can tell whether Jia Yueting built a car or a dream.

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