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Soar! Mystery company to acquire 29% stake in Evergrande

2024-07-18 Update From: AutoBeta NAV: AutoBeta > News >


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On the evening of May 26th, Evergrande Motor, a Hong Kong listed company, announced that the joint and individual liquidators and representatives of China Evergrande Group (in liquidation), Evergrande Health Industry Group Co., Ltd., and Acelin Global Limited (collectively referred to as potential sellers) entered into terms and conditions with independent third-party buyers, who held a total of 6.348 billion shares, accounting for about 58.5% of the total issued shares, that is, potential consignment shares. Subject to the conclusion of the Sale and purchase Agreement and subject to its terms and conditions, it is hereby proposed that 3.145 billion potential shares for sale (accounting for approximately 29.0% of all issued shares at the date of this announcement) will be acquired immediately, and 3.203 billion potential shares for sale (accounting for approximately 29.5% of all issued shares at the date of this announcement) will become the subject of an option for potential purchasers for a certain period of time after the date of the Sale and purchase Agreement.

It is worth mentioning that Evergrande also mentioned in the announcement that Evergrande is aware of the reference in the terms and conditions to enter into a credit agreement under which potential buyers will provide credit to Evergrande to finance the continued operation and development of the Group's electric vehicle business. Evergrande said that except for confidentiality, transaction restrictions, regulatory laws and jurisdiction and other provisions, the terms and conditions are not legally binding. The Sale and purchase Agreement and the Credit Agreement are subject to further negotiation and have not yet been finalized, so the final terms of the Sale and Credit Agreement may be different from those set out in the terms and conditions.

Affected by the news, Evergrande covered a substantial increase of more than 94% today. As of press release, it rose 102.63% to 0.77 Hong Kong dollars per share, with a turnover of 75.58 million Hong Kong dollars and a total market capitalization of 8.35 billion Hong Kong dollars.

According to the annual report, Evergrande's total revenue in 2023 was 1.34 billion yuan, of which more than 1.1 billion yuan came from property sales, with an annual loss of 11.995 billion yuan. According to statistics, the cumulative loss of Evergrande has exceeded 100 billion yuan, including 56.344 billion yuan in 2021 and 27.664 billion yuan in 2022. As of December 31, 2023, Evergrande Automobile assets total 34.851 billion yuan, total liabilities 72.543 billion yuan, seriously insolvent, facing tremendous financial pressure.

At present, Evergrande is seriously short of funds, and the plant in Tianjin has stopped production since the beginning of the year. Data show that Evergrande New Energy vehicle (Tianjin) Co., Ltd. officially produced in September 2022, as of December 31, 2023, a total of 1700 Hengchi 5 vehicles, until the announcement of the Tianjin factory has not resumed production. Earlier, Evergrande admitted that it was facing tremendous financial pressure and said it would go all out 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, Evergrande issued an announcement a few days ago that the subsidiary Evergrande New Energy Automobile Investment holding Group Co., Ltd. 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. 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. If the subsidy is returned, Evergrande, which has lost its war capital, will undoubtedly face greater financial pressure, and there are many uncertainties as to whether Evergrande, which has been acquired with a 29 per cent stake, can jump out of the debt quagmire.

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