Geely to sell all share back to Lotus!

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Wow! Big news.

It appears L Catterton is their biggest backer now. SO I guess we'll see what they want to do.
 
chirowolf said:
electrek.co

Geely exercises its Put Option on Lotus UK, enabling reintegration of all businesses under the Lotus brand

Bear with me, as this one is a bit complicated and jargon-heavy. Lotus Technology Inc. announced that Geely, the majority...
electrek.co electrek.co

Not sure if this has been posted, but I thought this looked interesting
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Yeah, just a bit interesting! I don't yet understand the practicalities of it, or where it leaves Lotus UK, Lotus as Brand, Lotus having factories in UK and China etc
 
Its cool that it will no longer be Chinese owned but I think that means the financials are worse than expected and likely given the current portfolio they are still tied to Chinese manufacturing for the EV range. Its going to be rough for awhile.
 
A put option is probably not good news. It likely means that Geely are selling back to Lotus at a fraction of what they paid for it and that Geely think there's no chance that they would have made their money back let alone any profit if they had held on to it. It's also very off-putting for other potential investors ay least in the short-term if Lotus wanted to bring in any other funding. That said there may be some silver-lining if the Lotus UK management can turn things around mid to long term.
 
RoryBellows said:
Its cool that it will no longer be Chinese owned but I think that means the financials are worse than expected and likely given the current portfolio they are still tied to Chinese manufacturing for the EV range. Its going to be rough for awhile.
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non-cash transaction based on a pre-agreed pricing method

I wish I knew what that meant.
 
Six Speed Stephen said:
non-cash transaction based on a pre-agreed pricing method

I wish I knew what that meant.
Click to expand...
From the Lotus release
"Pursuant to the agreement, the Company will issue new shares valued at $10 per share in consideration of Geely and Etika’s transfer of Lotus UK shares. Lotus UK is valued at 1.15 multiples revenue plus cash minus debt of LGIL, based on LGIL’s audited consolidated annual financial report of 2024."
 
Six Speed Stephen said:
non-cash transaction based on a pre-agreed pricing method

I wish I knew what that meant.
Click to expand...
If I were to guess - and that's all I can do as there very little public detail; "non-cash transaction" means some kind of shares were exchanged rather than cash between Geely, Lotus and L Catterton, "pre-agreed pricing method" means some kind of pricing was agreed up-front possible the put-option itself when Geely bought a controlling share in Lotus as a guarantee?
 
Overall its going to be bad. Short term they will struggle with cash flow due to the restrictions in exporting to the US, long term they will struggle as their production is now all in China, except for the Emira.
 
Six Speed Stephen said:
non-cash transaction based on a pre-agreed pricing method

I wish I knew what that meant.
Click to expand...
From the press release:

'Pursuant to the agreement, the Company will issue new shares valued at $10 per share in consideration of Geely and Etika’s transfer of Lotus UK shares. Lotus UK is valued at 1.15 multiples revenue plus cash minus debt of LGIL, based on LGIL’s audited consolidated annual financial report of 2024.'
 
Six Speed Stephen said:
non-cash transaction based on a pre-agreed pricing method

I wish I knew what that meant.
Click to expand...
It’s a strange phrase to sell back equity but not get cash in return. Here’s what ChatGPT came up with.

- Equity in another related company (e.g., another brand under the Geely Group),
- Forgiving intercompany debt,
- Transferring intellectual property or licenses,
- Providing services or future value credits,

Normally I would think China wants IP, but Geely really just wanted the brand and built their own car. Chinese EVs are advanced and don’t need lotus tech to make them work. So I don’t know what non-cash asset could be - other than debt forgiveness? Not sure.

I wouldn’t mind if lotus UK just dropped the whole EV thing and made sportscars as a niche company that stands in contrast to everybody else. Focus on driving experience not chasing numbers.
 
I don't really understand the implications here.

Is this Geely washing their hands of Lotus and getting out while they can?
Who's going to pickup the £100's of millions of loss each year?
 
As I read it, the two parts of Lotus are being recombined...the UK-based portion focusing on sports cars and engineering consulting, and the China-based portion focusing on EVs - but it seems to be that China-based portion that is in control of it all now. I'd expect the China side of the business to grow, and the UK side to shrink.
 
If you considered Lotus as Chinese-owned before, I'd say it still is but it seems Geely abandoned them. Lotus Technology was basically Geely except seemingly as a separate venture with some other investors like L Catterton. Lotus Cars being more under Lotus Technology means their fate is even more tied to the destiny of the EV arm without the previous upsides of external funding from the larger Geely conglomerate. And you'd think that if Lotus had good prospects for the future that Geely would want to integrate them more into the overall brand rather than separate from them.
 
benjh1028 said:
Geely holds a controlling stake in Lotus Technology, so I'm not certain how "acquiring" Lotus Cars UK, means Geely is out. I read it as just a consolidation of the Lotus business units that are still under Geely ownership.
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That's a good point. I had misinterpreted the put to not only be Geely out of Lotus Cars but also Lotus Technology.
 
I’m glad I have a good independent lotus mechanic. Still love this car!
 

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