“Buyer Not Found: Evergrande Auto’s Restructuring Plan Hits a Setback”

The latest news shows that Evergrande Auto’s restructuring plan has encountered obstacles, as the operating environment is challenging and strategic investors or buyers are difficult to find. Additionally, Evergrande Auto is facing severe funding shortages, to the extent that it cannot even afford to pay the audit fees for the year 2024.

On February 3, Evergrande Auto (00708.HK) announced that the company has so far been unsuccessful in finding strategic investors or buyers who could help alleviate the group’s liquidity issues and promote a proper restructuring. The current challenging operating environment in China’s new energy vehicle market has undoubtedly hindered the company’s search for strategic investors or buyers.

Previously, Evergrande Auto had announced the existence of potential buyers.

On the evening of May 26, 2024, Evergrande Auto issued a statement on the Hong Kong Stock Exchange, indicating that China Evergrande’s liquidator, Evergrande Health Industry Group Limited, Acelin Global Limited, and other parties had entered into a terms agreement with a third-party buyer to sell their holdings in Evergrande Auto.

However, five months later, Evergrande Auto announced the termination of this transaction.

On October 25, Evergrande Auto issued a statement declaring the decision to cease all discussions related to the potential transaction with the potential buyer and decided not to proceed with the potential transaction. No buy-sell agreement was reached between the parties. The company continues to search for possible buyers and explore opportunities to sell its holdings in the new energy vehicle group.

The withdrawal of the potential buyer undoubtedly dealt a severe blow to Evergrande Auto, already deeply mired in a debt crisis. At that time, the “Daily Economic News” described this as potentially meaning that Evergrande Auto had lost its last “lifeline.”

In the announcement on February 3, Evergrande Auto also mentioned that over the past six months, the group has further reduced staff and cut other operational expenses to save costs. The group’s cash and cash equivalents level is low and is currently being used to maintain basic operational activities, including the basic maintenance of the group’s assets, especially the production plants and mechanical equipment.

Evergrande Auto also stated that due to the low and insufficient funding levels, it cannot guarantee the continuation of several services, including but not limited to its auditors and other relevant professional advisors, to conduct on-site audit work for the year ending December 31, 2024.

According to Evergrande Auto’s previously disclosed mid-year report for 2024, the company’s revenue for the first half of 2024 was 383.8 million yuan, a decrease of 75.17% compared to the same period last year, which was 1.54 billion yuan. Data shows that as of June 30, 2024, Evergrande Auto had delivered approximately 1,429 new energy vehicles.

In the first half of 2024, Evergrande Auto incurred a net loss of 20.256 billion yuan, an increase of 13.38 billion yuan compared to the same period last year’s 6.873 billion yuan.