Lei Jianping on January 8
Since the thunderstorm of Evergrande Group, Evergrande Automobile has been having a hard time.
Evergrande Automobile recently issued an announcement, saying that it was aware that its executive director Liu Yongzhuo had been criminally detained in accordance with the law on suspicion of violating the law and committing crimes.
Trading in the shares of Evergrande Auto has been suspended on The Stock Exchange of Hong Kong Limited with effect from 9 a.m. on 8 January 2024. Evergrande Auto applied to the Stock Exchange for the resumption of trading of its shares from 1 p.m. on 8 January.
As of now, Evergrande Auto's share price is HK$0.395, down 4.82% from the last trading day, and the company's market capitalization is about HK$4.283 billion so far.
According to the data, Liu Yongzhuo was born in 1981 and worked for China Evergrande in 2003, and was the vice president of China Evergrande, in charge of Guangzhou Evergrande Taobao Football Club, Evergrande Cultural Industry Group, Evergrande Agriculture and Animal Husbandry Group, Evergrande Internet Finance Group, Evergrande High-tech Group, and is currently the president of Evergrande New Energy Automobile Group and chairman of Evergrande New Energy Technology Group.
In 2010, Liu Yongzhuo served as the chairman of Evergrande Football Club, and in the same year, Evergrande won the championship of the Chinese Super League, and the following year Liu Yongzhuo bought the MVP Conca of the Brazilian League, and formed a front trident with Muric and Cleo, leading the team to win the Chinese Super League championship in 4 rounds in advance.
In 2019, Liu Yongzhuo served as the chairman of Evergrande New Energy Technology Group.
In June 2020, Liu Yongzhuo was appointed as an executive director and vice chairman of China Evergrande New Energy Automobile Group Co., Ltd. In 2020, Liu Yongzhuo served as President of Evergrande New Energy Automobile Group, Chairman of Evergrande New Energy Technology Group, and President of Vehicle Research Institute. In July 2022, the Hengchi 5 held a pre-sale press conference, and Liu Yongzhuo once said: The Hengchi 5 is the best pure electric SUV within 300,000 yuan.
Newton Group's US$500 million stake in Evergrande Auto has changed
Evergrande Auto also revealed that the deadline for the Newton Group share subscription agreement and the debt-to-equity swap subscription agreement is December 31, 2023. The Company would like to update shareholders and potential investors on the situation and that the parties to the Newton Group Share Subscription Agreement and the Debt-for-Equity Swap Subscription Agreement have not agreed to extend the deadline.
As a result, Newton Group's Share Subscription Agreement and Debt-for-Equity Swap Subscription Agreement have lapsed on 31 December 2023.
However, the parties to the Newton Group Share Subscription Agreement and the Debt-for-Equity Swap Subscription Agreement, as well as certain interested parties, have been and will continue to negotiate amendments to certain key terms of the proposed transaction and the debt-for-equity swap.
If the amendments to the Newton Group Share Subscription Agreement and the Debt-for-Equity Swap Subscription Agreement are effected, the Company and the relevant parties will comply with Rule 31.1 of the Takeovers Code where necessary. The Company will make monthly announcements until it announces its exact intention to proceed with the Proposed Transaction and the debt-for-equity swap (as amended by the parties' consultations) or decides not to proceed with the Proposed Transaction and the debt-for-equity swap.
On August 14, 2023 (after the trading session), Evergrande Automobile announced that it had conditionally agreed to allot and issue, and the subscriber had conditionally agreed to subscribe for the subscribed shares (i.e. 6,177,106,404 new shares), resulting in the subscriber holding approximately 27.5% of the total issued shares of Evergrande Automobile after the completion of the debt-to-equity swap and share subscription.
The total consideration for the subscriber is HK$3.89 billion (equivalent to approximately US$500 million), which means that the subscription price per subscription share is HK$0.6297.
On 14 August 2023 (after trading hours), Evergrande Group and Hui Ka Yin delivered to the Subscriber the Voting Rights Binding Deed duly executed by Evergrande Group and Hui Ka Yin, and the Subscriber delivered the Voting Rights Binding Deed duly executed by the Subscriber to Evergrande Group and Hui Ka Yin. The voting rights binding deed is effective from the closing date.
However, in October 2023, affected by the compulsory measures taken by Xu Jiayin, executive director and chairman of the board of directors of Evergrande, Newton Group's US$500 million stake in Evergrande Automobile, changed.
At that time, Evergrande Automobile issued an announcement stating that in view of the suspension of trading of its shares announced by Evergrande Automobile on September 28, 2023, together with a series of recent changes in China Evergrande Group, there are significant uncertainties, which in turn will also bring significant uncertainty to the share subscription agreement and the proposed transaction.
According to the share subscription agreement, the completion of Evergrande Group's debt restructuring and a series of other preconditions are important prerequisites for closing. In this case, the Subscriber suspends the performance of the relevant obligations under the Share Subscription Agreement.
Pursuant to the Transitional Funding Agreement, the conditions precedent for Newton (Zhejiang) Automobile Co., Ltd. (the "Funding Provider") to pay the second and third tranches of funds to Evergrande New Energy Automobile (Tianjin) Co., Ltd. (the "Funding Recipient") could not be met due to the current circumstances that prevented the conditions precedent under the Share Subscription Agreement from being met, and the Funding Provider was temporarily obliged to pay the second and third tranches of funds to the Funding Recipient.
The subscriber hopes that Evergrande Auto will make it clear that the debt restructuring plan of Evergrande Group involved in the share subscription agreement needs to be readjusted and there is a plan to launch a new restructuring plan, and that China Evergrande Group, Evergrande Automobile, creditors and related parties are willing to renegotiate the adjustments required by the proposed transaction plan under the premise that the new restructuring plan is clear.
Newton Motors claims to be the capital of the Middle East
The subscriber is Newton Motors, which has a vehicle assembly plant in Abu Dhabi. In terms of technology, Newton Motors has expanded its capabilities to include photovoltaic power generation, green hydrogen production, and energy storage.
Although the founder, chairman and CEO of Newton Motors is Wu Nan. As of May 23, 2023, Wu Nan held 77% of the voting rights of Newton Motors.
Since September 2022, Newton Motors' first parts and supply chain facility in Jinhua, Zhejiang Province, has been under rapid construction.
In November 2022, Newton Motors completed its merger with EastStone Acquisition Corporation, a special purpose vehicle, and listed on the NASDAQ in the United States, at that time, it reached a PIPE investment subscription agreement with institutional investors such as Jinhua local state-owned assets and the Office of the Crown Prince of the United Arab Emirates, with a total investment of US$600 million. As of now, the company has a market capitalization of about $2.86 billion, but the trading volume is extremely low.
According to the annual report, Newton Motors has no revenue in 2020, 2021, and 2022, and its operating losses in the same period are $10.9 million, $10.77 million, and $40.45 million, respectively.
As of December 31, 2022, Newton Motors had cash and cash equivalents, restricted cash of $212 million. Newton Motors itself does not have such a large amount of money to invest in Evergrande Motors.
At the beginning of Newton Automobile's stake in Evergrande Automobile, it was under the banner of Middle Eastern capital, claiming to be a mobile and green energy company headquartered in Dubai, United Arab Emirates, but many of the actual controllers are from Jiangsu and Zhejiang.
Evergrande Auto is insolvent
According to the financial report, Evergrande Automobile's revenue in 2021 and 2022 will be 74.98 million yuan and 134 million yuan respectively, and the gross loss will be 170 million yuan and 93.86 million yuan respectively.
Evergrande Automobile's operating losses in 2021 and 2022 will be 24.845 billion yuan and 12.141 billion yuan, respectively, and the annual losses will be 56.581 billion yuan and 27.664 billion yuan, respectively.
Evergrande Automobile's revenue in the first half of 2023 was 155 million yuan, compared with 24.11 million yuan in the same period last year, and the gross loss was 60.88 million yuan, compared with a gross loss of 9.64 million yuan in the same period last year.
Evergrande said that more than 760 units of all pre-orders for the Hengchi 5 (which started pre-orders in July 2022) were delivered in the reporting period.
Evergrande Automobile's operating loss in the first half of 2023 was 4.813 billion yuan, compared with 1.76 billion yuan in the same period last year, 6.873 billion yuan for the period, 13.365 billion yuan in the same period last year, and a total comprehensive loss of 7.42 billion yuan in the period, compared with a total comprehensive loss of 14.773 billion yuan in the same period last year.
As of June 30, 2023, Evergrande Automobile's total liabilities were 75.692 billion yuan.
On June 30, 2023, Evergrande Automobile had a total of 48 pending litigation cases with a target amount of more than 30 million yuan, with a total target amount of about 10.887 billion yuan.
As at 30 June 2023, Evergrande Auto had accumulated outstanding debts due to approximately RMB9,341 million, and as at 30 June 2023, the Group's overdue commercial bills accumulated approximately RMB3,591 million.
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