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Demand the return of 1.9 billion of the subsidy! Evergrande was ordered to stop production and sales.

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

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AutoBeta(AutoBeta.net)06/13 Report--

On the evening of June 11, Evergrande announced on the Hong Kong Stock Exchange that the relevant subsidiaries had recently received further administrative decisions issued by the relevant local administrative departments.

According to the announcement, the relevant local administrative departments believe that on the basis that the relevant subsidiaries have not fulfilled their contractual obligations in accordance with the terms of the relevant agreements (mainly including the failure to complete the establishment of group headquarters, global R & D centers and global production bases in the areas under the jurisdiction of the relevant local administrative departments within the agreed time limit. Scale of investment, planned production capacity and annual sales target The failure to build the production base and R & D center on schedule and put into production and complete the research and development of new energy vehicle models) has constituted a breach of contract, and the purpose of judging the relevant agreements from the operating conditions of the relevant subsidiaries can no longer be realized objectively. Therefore, the processing decisions are made according to the provisions of relevant laws and regulations as follows: (1) rescind three of the relevant agreements. (2) the relevant subsidiaries shall, within 15 days from the date of receipt of the administrative decision, return a total of about 1.9 billion yuan of awards and subsidies to the relevant local administrative departments.

At the same time, Evergrande indicated that if the above treatment results are eventually implemented, there will be a risk that the relevant factory land of the Group will be forcibly resumed and the above-ground buildings and equipment will be used to repay the incentives and subsidies, which in turn has a significant impact on the financial position and operations of the Company or the relevant subsidiaries.

In addition, Evergrande said that Evergrande New Energy Automobile (Tianjin) Co., Ltd., a subsidiary of the company, recently received a notice from another relevant department. After verifying the production access conditions of new energy passenger vehicle products in Tianjin Evergrande, the department raised three issues requiring rectification, and intended to order Tianjin Evergrande to stop producing and selling new energy passenger vehicle products, and to carry out rectification. During the rectification and reform period, the department will suspend the acceptance of Tianjin Evergrande's declaration of new products for new energy passenger vehicles and the transmission of electronic information on the qualification certificate of new energy passenger vehicles, which will be restored after the rectification and reform is completed and the production access conditions are met through review.

In this regard, Evergrande said that the company attaches great importance to the department's inspection of Tianjin Evergrande and actively rectifies the problem after its verification, and the company plans to submit a complaint for rectification materials to the department before the above-mentioned deadline. If the above proposed treatment is eventually formally implemented, it will have a significant impact on the operation of the Group.

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.

It is understood that Evergrande is seriously short of funds, and the factory in Tianjin has stopped production since the beginning of the year. However, Evergrande has said in its annual report that it will spare no effort to introduce strategic investors to actively raise funds to maintain the company's survival and future development plans. With the introduction of strategic investors and the availability of funds, the company plans to continue to promote the development and verification and mass production of Hengchi's 5-year model and changes, Hengchi 6 and Hengchi 7.

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.

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