Small HK firm dares to dream gig U.S. auto plans

A small Hong Kong company run by a Chinese fugitive has some very grand ambitions to make hybrid cars in the U.S.

Far East Golden Resources Group Ltd. said in a statement to the Hong Kong stock exchange that it has set up a company in the U.S. to produce hybrid cars, and is seeking to raise as much as US$7.86 billion in a private placement to fund the enterprise.

That sum is about 38 times the company's market capitalization of 1.58 billion Hong Kong dollars, or US$203.9 million, as of Wednesday's close. Shares of Far East Golden Resources closed at 28.5 Hong Kong cents following the announcement, down 15%, after rising 86% the previous day.

Getting investors to believe in Far East Golden's plans could be a challenge, given its current business focus on bio-organic fertilizers and environmental products. It also sells car axles, and once was involved in gold mining.

Far East Golden, formerly known as Compass Pacific Holdings Ltd., said it hopes to gain a share of the lucrative market for environmentally friendly vehicles.

The new company is called Hybrid Kinetic Motors Project A, LP.

Far East Golden is 42%-owned by Chinese fugitive Yang Rong, former chairman of Brilliance China Automotive Holdings Ltd. Mr. Yang fled to the U.S. in mid-2002 after getting a tip that local police were seeking to detain him. Brilliance China said later that year that it had received a warrant for his arrest related to suspected involvement in economic crimes, but the company didn't specify the nature of the allegations.

The plan to transform the company's business focus and the fund-raising plan will have to be approved by minority shareholders, according to the statement.