The electric vehicle unit of defaulted property developer China Evergrande Group said Dubai-based NWTN Inc. will suspend carrying out its obligations under their share subscription agreement.
(Bloomberg) — The electric vehicle unit of defaulted property developer China Evergrande Group said Dubai-based NWTN Inc. will suspend carrying out its obligations under their share subscription agreement.
NWTN isn’t obligated to provide the second and third tranches of transitional support to China Evergrande New Energy Vehicle Group Limited, “given the current situation,” according to a filing to the Hong Kong Stock Exchange on Sunday. Evergrande NEV said it’s willing to renegotiate the deal and that trading of the company will resume on Monday, according to the filing.
The move adds to the list of questions over the future of the world’s most indebted developer, after setbacks to its restructuring plan in recent days roiled financial markets and raised the risk of a liquidation.
Evergrande NEV stock is an important part of the wider group’s debt restructuring, which is among the largest ever in China. Evergrande has proposed that creditors can choose to receive a combination of new debt and instruments tied to the shares of its property-services unit, its EV division or the builder itself.
Founded in 2019, the Guangdong-based EV unit of what was China’s largest developer announced ambitions to become the world’s biggest EV maker within three to five years and that it would start selling vehicles “soon.”
The car maker had said in July that it plans to raise about $500 million to satisfy capital requirements for production and sales of its Hengchi 5 EVs, its only available model. The company delayed payments and halted production when liquidity strains and liability issues mounted around its parent.
In August, NWTN, a mobility technology company, said it would invest $500 million in Evergrande NEV in exchange for shares and a majority of seats on the electric vehicle maker’s board.
At its peak valuation in April 2021, Evergrande NEV was worth more than Ford Motor Co. and General Motors Co., despite not yet having started sales. It began delivering electric sport utility vehicles late last year.
Still, the company recorded a net loss of 84 billion yuan ($11.7 billion) for 2021 and 2022 combined, according to results released in July. The firm also warned of its ability to continue as a going concern.
Hui Ka Yan, the founder of Evergrande, which is at the epicenter of China’s property crisis, has been put under police control, suggesting the firm may have entered a new phase involving the criminal justice system.
(Updates with context on Evergrande NEV throughout)
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