On February 25th, China Evergrande New Energy Vehicle Group Limited (Evergrande Auto) announced that in order to meet its upcoming payment obligations, the company has sold its equity to raise approximately 43.78 million Hong Kong dollars.
Evergrande Auto stated in a disclosure announcement titled “Disclosure of Sale of 20% Equity in Subsidiary” that its indirect wholly-owned subsidiary, Nevs Electric Vehicles Sweden (NEVS), entered into agreements on November 25, 2024, to sell a 20% stake in the target company for a total consideration of 60 million Swedish Krona (approximately 43.78 million Hong Kong dollars). Additionally, NEVS agreed to sell promissory notes with a principal amount of 60 million Swedish Krona, for a total consideration of 300 million Swedish Krona (approximately 21.89 million Hong Kong dollars). This transaction aims to enhance liquidity to meet NEVS’s upcoming payment obligations.
According to financial outlet “Yicai,” completing this sale transaction could result in Evergrande Auto incurring a total sales loss of 23.80 million Swedish Krona (approximately 17.37 million Hong Kong dollars).
The announcement clarified that the target company is owned indirectly by the company through NEVS and is primarily engaged in automotive research and manufacturing businesses.
Facing financial difficulties, Evergrande Auto has yet to secure investors or buyers willing to inject capital.
In a statement released on the evening of February 3rd, Evergrande Auto acknowledged that despite six months of cost-saving efforts, the company can only sustain basic operational activities. Due to insufficient funds, the company cannot guarantee the continuation of certain services, including but not limited to the audit and on-site audit activities conducted by auditors and related professional consultants until the end of 2024.
Furthermore, Evergrande Auto expressed that as of now, they have not found a strategic investor or buyer to help alleviate liquidity issues and facilitate appropriate restructuring, but they will continue seeking potential buyers.
Based on the interim performance report released by Evergrande Auto on August 30, 2024, for the six-month period ending on June 30, 2024, the company’s revenue was 383.77 million RMB, a year-on-year decrease of 75.17%; gross profit was 24.33 million RMB, a year-on-year decrease of 103.99%; and total net losses amounted to 20.257 billion RMB, a year-on-year increase in losses of 194.73%.
According to the “Securities Times,” in the first half of 2024, Evergrande Auto’s net losses expanded by 13.38 billion RMB compared to the same period in 2023, reaching a total loss surpassing the full-year loss in 2023 which was 11.995 billion RMB.
On February 25th, Evergrande Auto closed at 0.189 HK dollars per share, marking a decrease of 2.07%, with a total market value of 2.049 billion HK dollars.