China Evergrande New Energy Vehicle Group (Evergrande NEV), the electric-vehicle (EV) manufacturing unit of insolvent property developer China Evergrande Group, surged in Hong Kong after the liquidator of its parent found a buyer for a stake in the listed arm.
The stock jumped 87 per cent to HK$0.71 on Monday, as trading resumed after being suspended over the past week. It extended a 53 per cent jump on May 17, when the shares were last traded.
The liquidators reached an initial agreement on May 16 to sell a 29 per cent in Evergrande NEV to an unidentified buyer, who will provide funding to help the carmaker resume production, according to a statement to the Hong Kong stock exchange on Sunday night. The buyers have an option to buy the remaining 29.5 per cent stake held by the liquidators, the company said.
The deal, if completed successfully, will offer a silver lining to resurrect the EV maker that has been mired in a funding crunch after the collapse of its parent, whose chairman and founder Hui Ka-yan has been under police custody for suspected financial crimes. China’s securities regulator fined Hui 47 million yuan (US$6.5 million) and China Evergrande Group 4.2 billion yuan in March for falsifying revenue in the years leading up to its collapse.
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A vanishing fairyland dream: how China Evergrande rose, then crashed
A vanishing fairyland dream: how China Evergrande rose, then crashed
The proposed stake sale may trigger a general offer for Evergrande NEV’s shares under the listing rules, the statement said.
A funding shortage has hit the EV maker, with production at its Tianjin factory suspended since the beginning of the year, according to the statement.
China Evergrande’s move into EVs was an ambitious foray by former billionaire Hui, with sales of EVs surging on rising demand at home and abroad amid a global goal to cut emissions. EVs will make up 50 per cent of China’s total car sales by 2030, according to Moody’s Ratings.
Trading in shares of China Evergrande has been suspended since January 29, when the stock closed at HK$0.163, after losing 99 per cent of its value over the past four years. It had combined liabilities of US$332 billion as of June last year, making it potentially the world’s most indebted developer.
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