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Late night announcement! Evergrande is required to return the subsidy.

2024-06-25 Update From: AutoBeta NAV: AutoBeta > News >

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AutoBeta(AutoBeta.net)05/23 Report--

In the late night of May 22nd, Evergrande Automobile announced that its subsidiary Evergrande New Energy Automobile Investment holding Group Co., Ltd. recently received a letter from the relevant local administrative departments asking the local government to rescind the investment cooperation agreement. and return a total of about 1.9 billion yuan in awards and subsidies, and the relevant subsidiaries are jointly and severally liable.

On April 29th, 2019, Evergrande signed a series of investment cooperation agreements with the relevant local administrative departments. Due to the failure to fulfill the contractual obligations in accordance with the relevant provisions of the relevant agreements, the relevant local administrative departments, in accordance with the provisions of the law, it is proposed to require Evergrande to rescind the relevant agreement and return a total of about 1.9 billion yuan of awards and subsidies to the local government departments.

Evergrande disclosed that it had built production bases mainly in Tianjin, Shanghai and Guangzhou, but only the car production base in Tianjin ended up in mass production, according to the financial report. After Evergrande announced a cooperation agreement with local governments in 2019, the increase in government subsidies for Evergrande did soar, and then returned to zero after the debt risk broke out. Data show that from 2019 to 2023, Evergrande received government subsidies of 1.363 billion yuan, 1.194 billion yuan, 409 million yuan, 0 yuan and 0 yuan respectively.

In response to the above TF matters, Evergrande said that at present, the relevant subsidiaries plan to write to the relevant local administrative departments for coordination, if the letter requires the final implementation, it will have a significant adverse impact on the financial position and operation of the company or the relevant subsidiaries. Meanwhile, trading in Evergrande Motor shares will continue to be suspended until further notice. Earlier, Evergrande temporarily suspended its trading on May 17 and disclosed a notice on May 20 that "major inside information has yet to be published."

Evergrande has been stuck in a quagmire since it was founded in 2019. According to statistics, the cumulative loss of Evergrande has exceeded 100 billion yuan, including 56.344 billion yuan in 2021, 27.664 billion yuan in 2022 and 11.995 billion yuan in 2023. Although Evergrande delivered a total of 1389 Hengchi vehicles in 2023, most of its revenue came from property sales rather than car sales. At the same time, by the end of 2023, Evergrande has total assets of 34.851 billion yuan, total liabilities of 72.543 billion yuan, cash and cash equivalents of 129 million yuan, seriously insolvent, facing huge financial pressure.

If the subsidy is returned, Evergrande, which has lost its war investment funds, will undoubtedly face greater financial pressure. Previously, Evergrande has admitted that it is facing financial difficulties and said it will spare no effort to introduce strategic investors to actively raise funds to maintain the group's survival and future development plans. However, now it seems that Evergrande's financial difficulties have not been alleviated, but have become more and more serious. In January, Evergrande announced that the share subscription agreement and debt-for-equity swap agreement with Newton Group had lapsed. Previously, according to the agreement, Newton Group proposed a strategic investment of 500 million US dollars in Evergrande. At the same time, Liu Yongzhao, executive director of Evergrande Motor, was criminally detained in accordance with the law on suspicion of breaking the law and committing a crime.

In the announcement, Evergrande once again stressed the importance of funds, and said that in the case of the introduction of strategic investors and funds in place, it plans to continue to promote the development, verification and mass production of Hengchi's 5-year model and modification, Hengchi 6 and Hengchi 7. At the same time, the company will also continue to promote the research and development of new platforms and new models according to market demand. However, the premise of all this is that the funds are available.

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