Shulou(Shulou.com)11/24 Report--

CTOnews.com April 24 news, March 22 this year, China Evergrande issued a notice to disclose the proposed overseas debt restructuring and quarterly business updates. With regard to the new energy vehicle section, Evergrande said that the group is at risk of shutting down production without access to new liquidity.

The forecast cash flow section of the announcement shows that if Evergrande New Energy vehicles can seek financing of more than 29 billion yuan in the future, it plans to launch a number of flagship models and hopes to achieve mass production. In addition to Evergrande, NEVS, the Swedish global electric car company, which is 100% controlled by Evergrande Group, also announced the launch of the "hibernation program". To that end, the company plans to lay off 95 per cent of its staff and could go bankrupt if the shares cannot be sold in the future or if no new investors take over the NEVS.

China Evergrande announced today that the buyer (an Xin Holdings Limited, a wholly-owned subsidiary of the company) and the company entered into a sale and purchase agreement with Evergrande Automobile, on the basis of which the buyer conditionally agreed to buy and Evergrande conditionally agreed to sell the target shares as a beneficial owner, including 21 Evergrande Health Valley projects, 5 Evergrande Health City projects and 21 property development projects.

According to reports, the initial consideration of Evergrande's target shares is 2 yuan (CTOnews.com note: Evergrande's highest market capitalization in 2021 is nearly 700 billion Hong Kong dollars, while 700 billion Hong Kong dollars is now about 612.5 billion yuan), which needs to be adjusted with reference to the adjusted net asset value of the target group on December 31, 2022.

It is mentioned in the announcement that if the adjusted net asset value of the target group exceeds RMB2, the consideration of the target shares will be adjusted to the amount of the adjusted net asset value of the target group (adjusted consideration), and the buyer shall pay Evergrande an amount equal to the difference between the adjusted consideration and the initial consideration of the target shares (remaining consideration).

Evergrande Automobile said in an announcement issued on the 24th: due to lack of funds, the Group's Tianjin plant suspended the production of Hengchi 5. The Group plans to resume production in May 2023. "

Evergrande also said in the announcement that "further investment of resources into the sale of the Group's health space project is not in line with its overall deleveraging strategy and may impose restrictions on the Group's development of new energy vehicle divisions.

Evergrande's board of directors believes that the above projects can be smoothly integrated with the group's existing real estate development business. Evergrande's board of directors said that the restructuring would optimize the structure of Evergrande Automobile Group so that it could focus on the development of new energy vehicle divisions and invest in the R & D and production of new energy vehicles derived from the new energy vehicle division.

Taking into account the recent orientation of investors towards SEHK-listed companies mainly engaged in the new energy vehicle segment, Evergrande's board of directors is of the view that Evergrande's valuation can be improved by concentrating Evergrande's business in the new energy vehicle division, that is, Evergrande Automobile Group ceases to operate two different divisions, which may help attract investors to join Evergrande and raise funds. In view of the fact that Evergrande Automobile Group is an indirect subsidiary of the Company, this will also benefit the Group.

In addition, as part of Evergrande's overall offshore debt restructuring plan, the company's financial creditors are now expected to receive bonds that can be exchanged for Evergrande shares on a number of terms. As a result, these creditors will also benefit from the value growth of Evergrande Automotive Group.

Related readings:

"Evergrande: cumulative delivery of more than 900 Hengchi 5, there is a risk of stopping production in the case of failure to obtain additional liquidity."

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