Evergrande New Energy Vehicle Sells Shares At 93% Discount To May Price

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by Tyler Durden
Wednesday, Nov 10, 2021 - 03:25 AM

By Sofia Horta e Costa, Bloomberg commentator and TV anchor

What a difference six months make for Evergrande’s cash-strapped electric vehicle unit.

With its parent all but shut out of the dollar bond market, China Evergrande New Energy Vehicle is tapping equity investors for fresh funds by selling 174.8 million new shares at HK$2.86 apiece. That’s 93% lower than the price of its additional offering in May.

At HK$500 million ($64 million), the amount of funds the company seeks to raise is modest compared with two previous share sales this year. The May placement raised HK$10.64 billion, while in January six investors -- who are locked up with the shares for 12 months -- bought HK$26 billion worth of the stock at HK$27.30 a share.

Shares in Evergrande’s electric car unit have tumbled almost 90% this year amid concern over the group’s liquidity crunch. Evergrande NEV said in September it couldn’t guarantee it could meet its financial obligations. 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 parent company.

Parent Evergrande Group needs to pay interest of $148.1 million on three bonds Wednesday as grace periods expire. Failure to pay could trigger cross-default clauses among the builder’s $19.2 billion of outstanding dollar notes.

While Evergrande NEV bills itself as a carmaker, much of the money it does bring in comes from its community health service business and nursing home facilities -- a legacy of when the unit was a health-care company.

Evergrande NEV’s shares closed Tuesday at HK$3.57.