China Evergrande’s EV unit suspends $500 million share subscription deal. Evergrande resume trading its stock in the market. The Chinese company stated in the filing that the suspension of the share subscription deal was a result of significant uncertainties linked to the Evergrande group.
A share sale plan between China Evergrande New Energy Vehicle Group (0708.HK), the electric-vehicle arm of embattled property developer China Evergrande (3333.HK) and U.S.-listed NWTN (NWTN.O) has been halted. This information comes from a filing with the Hong Kong stock exchange by China Evergrande on October 9.
Evergrande EV share deal
Evergrande EV share deal suspension as per the company filing was a result of “significant uncertainties” linked to the group. As per report, the troubled property developer hold majority stake in electric vehicle (EV) company China Evergrande New Energy Vehicle Group.
In an announcement made in August, the Evergrande EV subsidiary stated its agreement to issue 6.18 billion new shares to the Dubai-based mobility company NWTN. The total consideration for Evergrande EV share deal was HK$3.89 billion ($496.72 million), indicating a subscription price of HK$0.6297 per share.
Evergrande resumes trading
According to the filing on Sunday, trading in shares of the China Evergrande New Energy Vehicle Group, which had been suspended on September 28, is set to resume on Monday, October 9.
The suspension of this share sale plan underscores the broader challenges facing Evergrande, which has been grappling with a debt restructuring crisis and a slew of investigations.
Evergrande financial troubles
Resumption of trading will likely be met with keen interest from investors and market observers. As they are eager to gauge the impact of Evergrande’s ongoing financial troubles on its electric vehicle arm.
Previously, Evergrande had reported the initiation of investigations against the parent company, its founder, and senior executives. Trading for the group had been halted last after its billionaire founder, Chairman Hui Ka Yan is under “mandatory measures” linked to “suspicion of illegal crimes”.
Chinese authorities investigation
Simultaneously, the debt restructuring plan of the firm has faced setbacks. The distressed property group stated that there is no other relevant information requiring disclosure.
According to a Wall Street Journal report, citing unnamed sources, Chinese authorities are investigating whether Hui tried to transfer assets offshore while the company was grappling with incomplete projects.
Evergrande is positioned at the core of a prolonged property crisis, adversely impacting the Chinese economy and diminishing confidence in the housing market. The company is scheduled for a hearing on Oct 30 in a Hong Kong court regarding a winding-up petition. This situation has the potential to compel the company into liquidation.
