The EV unit of embattled real estate developer China Evergrande Group said that liquidators are in talks with a potential buyer who may also extend a new line of credit to support production.
A group of liquidators representing the owners of China Evergrande New Energy Vehicle (NEV) reached a preliminary agreement with an unidentified buyer who could take an initial 29 per cent stake, according to a Hong Kong stock exchange filing on Sunday (May 26). The deal, which still requires due diligence, would include an option to buy an additional 29.5 per cent later.
The agreement includes a possible credit line to be arranged by the potential buyer, who isn’t connected with Evergrande NEV. If the deal goes ahead, it could trigger an obligation for a “mandatory general offer”, according to the filing.
The announcement comes days after Evergrande NEV was pursued by local authorities to repay 1.9 billion yuan (S$360 million) in subsidies after failing to start its long-awaited mass production of electric vehicles (EVs). The company’s Tianjin factory stopped operating since the beginning of the year.
Trading in the shares has also been suspended since May 17. The company said in Sunday’s filing that it’s applying to the bourse to resume trading on May 27.
Evergrande NEV has been struggling since its parent got sucked into China’s property crisis in 2021.
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The EV maker had produced only 1,700 of its Hengchi EVs as at the end of last year. It reported a loss of 12 billion yuan for 2023. Valued at more than Ford Motor and General Motors combined at its peak, the company was worth just US$528 million when the shares were suspended. BLOOMBERG
