An entrepreneur who wants to be first to distribute Chinese cars in the US is asking would-be dealer-investors to stump up US$2 million to put into an escrow account and a US$2 million letter of credit (L/C).

Dealer-investors who commit to his scheme essentially become partners of entrepreneur Malcolm Bricklin, who plans to strike a deal with the Chinese manufacturer of Chery vehicles during an April visit to China.

Investors

Critical to the financial structure of the venture is the number of dealer-investors who make the trip to China with Bricklin.

The entrepreneur reckons he needs around 25 investors to make the venture work. Two weeks before the planned trip to China, he has around 11 dealers signed up but expects more signatures before he leaves.

Financial structure

Each potential dealer wanting to go on the trip must put US$2 million in an escrow account. If the dealer is impressed by the Chery auto manufacturer and signs a contract to sell Chery vehicles in the US, that US$2 million is released to Bricklin as start-up capital for his Visionary Vehicles.

Each dealer would also provide a US$2 million L/C to Bricklin that would create working capital for his company.

The idea behind this financial structure is that the first US Chery dealers own a share of Visionary Vehicles and could participate in the management of the company.

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