On the evening of July 28, Evergrande Automobile released an announcement stating that the Hong Kong Stock Exchange announcement of Evergrande Automobile said that the company’s subsidiary, Evergrande New Energy Automobile (Guangdong) Co., Ltd. and Evergrande Smart Automobile (Guangdong) Co., Ltd. (relevant subsidiaries) received a notice issued by the relevant local people’s court on July 26, 2024. Now the main contents of the announcement are as follows: Individual creditors of the relevant subsidiaries applied to the relevant local people’s court on July 25, 2024 to apply for bankruptcy reorganization of the relevant subsidiaries. The above notice has a significant impact on the production and operation activities of the company and the relevant subsidiaries.
Data shows that Evergrande New Energy Automobile (Guangdong) Co., Ltd. was established in January 2019, wholly owned by Evergrande New Energy Automobile Investment Holding Group Co., Ltd., with the legal representative being Li Fokui and the registered capital of 5 billion yuan. In April 2024, Evergrande New Energy Automobile Investment Holding Group Co., Ltd. and Evergrande New Energy Automobile (Guangdong) Co., Ltd. added a piece of information about the person being executed, with the execution target of more than 155 million yuan, involving a contract dispute case, and the enforcement court is the Intermediate People’s Court of Guangzhou City, Guangdong Province.
Looking back at the course of Evergrande Automobile, it is not difficult to find that behind the application for bankruptcy reorganization is the severe financial dilemma faced by the company.
On June 11, the relevant departments intended to order Tianjin Evergrande to stop the production and sales of new energy passenger car products and carry out rectifications. In addition, the relevant local administrative departments required Evergrande Automobile to return the various rewards and subsidies already issued totaling about 1.9 billion yuan.
Previously, Evergrande Automobile had announced that 29% of its shares would be acquired immediately. This news once made the market full of expectations for the company’s future. However, as the transaction has been delayed from landing and the continuous deterioration of the company’s financial situation, the patience of investors is gradually wearing away.
On May 26, Evergrande Automobile said that the potential buyer will provide a loan to Evergrande Automobile to fund the group’s continuous operation and the development of the group’s electric vehicle business. Evergrande Automobile frankly stated that it currently has a serious shortage of funds, and the Tianjin factory has no longer produced since the beginning of this year and has not yet resumed production.
On July 26, Evergrande Automobile released an announcement that the discussions among the potential seller, the potential buyer and the company are still ongoing; the potential seller and the potential buyer have not yet entered into a purchase and sale agreement, and the potential buyer and the company have not yet entered into a credit agreement. At the same time, Evergrande Automobile emphasized that due to the potential transaction still awaiting further due diligence, including but not limited to the potential buyer’s proof of funds and a comprehensive investigation of the group’s assets, liabilities, business, etc., the potential transaction may or may not proceed. Due to the uncertainty of the potential transaction, shareholders and potential investors should act with caution when conducting share transactions.
At present, the situation of Evergrande Automobile is still very difficult. Financial report data shows that in 2023, Evergrande Automobile’s total revenue was 1.34 billion yuan, of which more than 1.1 billion yuan of revenue came from property sales, and the annual loss was 11.995 billion yuan. As of the end of December 2023, Evergrande Automobile’s total assets were 34.851 billion yuan and the total debt was 72.543 billion yuan, with a serious situation of insolvency and facing huge financial pressure.
For Evergrande Automobile, the creditor’s application for bankruptcy reorganization will make the share transfer transaction this transaction more difficult. Under multiple pressures such as shortage of funds, factory suspension, and government subsidy return, whether Evergrande Automobile can successfully “sell itself” to get out of the predicament is still an unknown.
