China Evergrande New Energy Vehicle Group Ltd. plans to raise approximately $ 347 million from a stock placement to bolster its financial position and fund production of electric vehicles.
The Hong Kong-listed company, also known as Evergrande Auto, sells 900 million shares for three Hong Kong dollars apiece, which is $ 0.39 per share. This corresponds to a price reduction of almost 15% compared to the last traded price of the share, the company announced on Friday.
In the most recent transactions, its parent company, real estate developer China Evergrande Group, would sell some of its shares in the auto unit to a group of investors and then use some of the proceeds to buy newly issued shares in the company. Further proceeds from the share placement would be used for production and research and development, the company said. After the transactions, the developer’s stake in Evergrande Auto would decrease from the current 62.55% to 57.36%.
In September Evergrande had warned Auto that it was facing a “serious shortage of funds” and may not be able to meet its financial obligations. At that time, there had been no significant progress in resuming projects that had previously stalled due to payment delays.
A plan to raise funds through a second listing on the Science and Technology Innovation Board of the Shanghai Stock Exchange or STAR Market has also been abandoned.
The company has since been in talks to attract new investors, and announced last week that it had raised $ 63 million in stock sales to fund its projects. including research and development.
Evergrande Auto has also been hit hard by the financial hardship of its parent company, a leading real estate developer in China. Evergrande Auto’s market cap topped $ 80 billion in February – briefly a higher valuation than that of many global automakers – but has since fallen below $ 5 billion.
Evergrande Auto, which has not yet made money selling cars, said the funds raised through the share placement will be used to “pave the way for Hengchi new vehicle production.”
A few weeks ago, Evergrande founder Hui Ka Yan said the developer plans to gradually shift its focus from real estate to producing electric vehicles. The Shenzhen-based developer owns more than 60% of Evergrande Auto, which ventured into electric vehicles in 2019 to capitalize on a global industry boom.
Mr. Hui famously predicted that the company would one day compete with Tesla Inc. It raised more than $ 3.3 billion earlier this year by selling about 10% of its shares to outside investors and said its goal is to become “the largest and most powerful company in the world” in the new energy vehicle group . “
This story was published through a news agency feed with no changes to the text
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