On May 27th, it was announced that last night, Evergrande Auto disclosed that on May 16th, a term sheet was entered into by certain liquidators and representatives of China Evergrande Group (in liquidation), Evergrande Health Industry Group Limited, Acelin Global Limited (collectively referred to as the potential sellers), and an independent third-party buyer.
As of the date of the announcement, the potential sellers collectively hold 6.348 billion shares of Evergrande Auto (approximately 58.5% of the total issued shares).
Upon entering into a sale and purchase agreement and subject to its terms and conditions, it is proposed that 3.145 billion potential shares for sale (approximately 29.0% of the total issued shares as of the announcement date) will be immediately acquired.
Additionally, 3.203 billion potential shares for sale (approximately 29.5% of the total issued shares as of the announcement date) will become the subject of an exercisable option by the potential buyer within a certain period after the date of the agreement.
The announcement also mentioned that Evergrande Auto is aware of a credit agreement mentioned in the term sheet, whereby the potential buyer (or another party designated with the company's consent) will provide credit facilities to Evergrande Auto to support the ongoing operations and development of the group's electric vehicle business.
Currently, Evergrande Auto is facing severe funding shortages, with the Tianjin factory ceasing production since the beginning of this year. As of the announcement date, the Tianjin factory of the group has not resumed production.
Evergrande Auto stated that the company will apply to the Stock Exchange for the resumption of trading of the company's shares from 9:00 am on May 27th.
Furthermore, it is noteworthy that on May 22nd, Evergrande Auto announced that due to a breach of the investment cooperation agreement, the company is required to return approximately RMB 1.9 billion in total rewards and subsidies that have been distributed to the relevant local administrative departments, with the related subsidiaries also bearing joint and several liabilities.
According to the financial report, as of December 31, 2023, Evergrande Auto has accumulated losses and shareholder losses of RMB 110.841 billion. Whether Evergrande Auto can break free from the debt quagmire remains uncertain.
