By P.R. Venkat
Ongoing troubles at beleaguered property developer China Evergrande Group have cast a shadow over Nasdaq-listed NWTN’s investment in its electric-vehicle unit.
China Evergrande New Energy Vehicle said late Sunday that the Dubai-based automaker said it would “suspend” the performance of relevant obligations under its share subscription agreement due to significant uncertainties with the EV maker’s parent, including the investigation of its chairman, Hui Ka Yan.
Shares of both Evergrande Group and its auto unit fell Monday. Evergrande was 11% lower, while Evergrande New Energy Vehicle, also known as Evergrande Auto, was down 8.9%.
Evergrande Auto shares resumed trading Monday after being suspended since Sept. 28.
In August, NWTN said it would invest $500 million for a 28% stake in Evergrande Auto. That investment would have helped Evergrande Auto fund the expansion of its factory that had been delayed due to its parent’s financial problems.
“The fund provider (NWTN) is temporarily not obliged to provide the second and third tranches of the transitional support amount to the fund recipient (Evergrande Auto),” the EV maker said in a filing to the Hong Kong stock exchange, citing a letter dated Sept. 29.
Evergrande Auto added that the letter from NWTN didn’t constitute “a notice to terminate the share subscription agreement, and as of the date of the letter, it has not requested terminating the share subscription agreement.”
Evergrande Auto said it has informed NWTN of its willingness to negotiate adjustments to the proposed transactions.
Evergrande Group in late September said its chairman was under investigation by authorities for potential criminal wrongdoing and that it owed tens of billions of dollars in unpaid bills to lenders, contractors and suppliers. Regulators have also blocked parts of the company’s turnaround plan.
NWTN has asked if the parent’s debt-restructuring plan would need readjustment and if there were any new restructuring plans, Evergrande Auto said.
Write to P.R. Venkat at [email protected]
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