Source: Securities Times.
The latest news about Everg Vehicle.
On the evening of June 11th,$EVERG VEHICLE (00708.HK)$The related subsidiary companies have recently received an administrative decision from the relevant local administrative department in the form of an "Administrative Decision" and another "Notice".
The letter attached to the "Administrative Decision" indicates that the relevant local administrative department believes that the relevant subsidiary companies have breached the contract by failing to fulfill their contractual obligations in accordance with the terms of the agreement. Therefore, the following decisions have been made: 1. Terminate three of the relevant agreements; 2. The relevant subsidiary companies shall return all awards and subsidies totaling approximately 1.9 billion yuan within 15 days from the date of receiving the administrative decision.
According to the "Notice," as the only qualified whole vehicle factory of Evergrande Auto at present, Tianjin Evergrande has been ordered by the relevant department to stop the production and sale of new energy passenger vehicle products and carry out rectification.
The unfulfilled obligations of the agreement include: failure to complete the investment scale, planned capacity and annual sales target related to the establishment of the group headquarters, global R&D center and global production base in the areas under the jurisdiction of the relevant local administrative department within the agreed deadline; failure to construct the production base and R&D center and putting them into production, and completing the research and development of new energy vehicle models on schedule.
Evergrande Auto stated that if the above-mentioned decision is finally executed, it will lead to the risk of the company's related factory lands being forcibly reclaimed, the above-ground buildings and equipment being used to repay awards and subsidies, and then have a significant impact on the company's or its related subsidiary's financial condition and operation.
At present, the relevant subsidiary companies intend to apply for administrative reconsideration to the relevant municipal people's government.
Evergrande Auto received another "Notice" about its subsidiary company, Evergrande New Energy Automobile (Tianjin) Co., Ltd. (referred to as "Tianjin Evergrande"), which needs to be rectified. The relevant department ordered Tianjin Evergrande to stop the production and sale of new energy passenger vehicle products and carry out rectification.
During the rectification period, the department will suspend the acceptance of new product declarations for new energy passenger cars from Tianjin Evergrande, as well as the electronic information transmission of new energy passenger car product qualification certificates, until the rectification is completed and the production access conditions are met after the review.
Evergrande Auto stated that the company attaches great importance to the department's verification of Tianjin Evergrande and actively rectified the problems after the verification. If the above-mentioned decision is finally executed, it will have a significant impact on the group's business
It is reported that Tianjin Evergrande is the only qualified but long-closed whole vehicle factory of Evergrande Auto, and Evergrande Auto's factories in other places also have various problems in the early stage and have not been put into production officially.
According to Evergrande Auto's financial report, the government subsidy data for 2018, 2019, 2020, 2021, and 2022 in the 'deferred income' government subsidy section of the annual report are: 0 yuan, 1.363 billion yuan, 1.194 billion yuan, 0.409 billion yuan, and 0 yuan, respectively. It can be seen that after signing a cooperation agreement with the local government in 2019, Evergrande Auto's government subsidies increased significantly, and after the subsequent debt crisis, they returned to zero.
On the evening of March 27th, Evergrande Auto disclosed its 2023 financial report. The financial report shows that as of December 31, 2023, Evergrande Auto's cumulative losses have reached 110.841 billion yuan, of which the loss in 2023 is about 12 billion yuan. At the end of 2023, Evergrande Auto's total assets were 34.851 billion yuan, total liabilities were 72.543 billion yuan, including 26.484 billion yuan in loans; during the same period, Evergrande Auto's cash and cash equivalents were only 129 million yuan, far from enough to cover the loans.
With huge losses, debt, and continuous litigation, Evergrande Auto urgently needs new "life-saving money" to ease the crisis. However, whether Evergrande Auto can find new financing channels and turn the tide of the downturn and achieve self-rescue remains to be seen in the current market environment.
In the announcement on May 26th, Evergrande Auto announced that 29% of the company's shares would be immediately acquired. Acrelin Global Limited (referred to as the 'potential seller') to whom Evergrande Group and Evergrande Health Industry Group Co., Ltd., terminatively clear all its equity, and a potential buyer independent of the company and its affiliates (referred to as the 'potential buyer') represented by liquidators from time to time were said to have entered into a terms agreement, which stipulated that after the signing of the purchase and sale agreement, 3.145 billion shares of Evergrande Auto (approximately 29% of the total shares issued) would be acquired, and the remaining 3.2 billion shares (approximately 29.5% of the total shares issued) would become the target of a possible option exercise by the potential seller and the date of the purchase and sale agreement.
Specifically, the potential seller jointly holds 6.348 billion shares of Evergrande Auto (accounting for approximately 58.5% of the total shares issued) (potential shares to be sold), and after the purchase and sale agreement is signed, 3.145 billion potential shares to be sold (approximately 29% of the total issued) will be acquired, and the remaining 3.2 billion shares (approximately 29.5% of the total issued) will become the target of a possible option exercise by the potential seller within a certain period after the date of the purchase and sale agreement.
The terms agreement also revealed that the potential buyer will provide the company with loans to support the continuous operation and development of the group's electric vehicle business.
As of the close on June 11th, the stock price of Everg Vehicle was HKD 0.43 per share, with a latest total market value of HKD 4.663 billion.
Editor/tolk