Evergrande Loss-Making EV Arm to Raise $64 Million in Share Sale
Evergrande’s EV Unit to Raise HK$500 Million in Share Sale
(Bloomberg) -- China Evergrande Group’s electric-car unit plans to raise HK$500 million ($64 million) in a share sale, which it says will be used to put its long-delayed vehicles into production.
The stock was priced at HK$2.86 apiece, a 20% discount to Tuesday’s closing price, China Evergrande New Energy Vehicle Group Ltd. said in a statement Wednesday. That’s way off the record high of HK$72.25 the stock reached in February, before a selloff as the unit’s parent company battled to stave off collapse.
At its peak, Evergrande NEV was one of the most valuable assets in Evergrande founder Hui Ka Yan’s empire, and a potential source of funds to prop up the property developer.
But as recently as September, Evergrande NEV warned of a serious shortage of funds, saying it had suspended paying some of its operating expenses and some suppliers had stopped work, stoking concern it wouldn’t be able to start mass production of its long-awaited electric vehicles.
Raising $64 million is unlikely to make much of an impact considering Evergrande NEV reported cash burn of around $130 million in the first six months of the year and a $742 million loss. The group’s Hong Kong-traded shares closed up 0.8% at HK$3.60 on Wednesday.
Two models of Evergrande NEV’s Hengchi vehicles were however included in a list of new vehicles submitted for public feedback, according to a post on China’s Ministry of Industry and Information Technology website Tuesday, suggesting it may be nearing production.
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