China Evergrande’s electric vehicle unit will issue new shares as part of its restructuring plan.
(Reuters) -Embattled property developer China Evergrande Group has announced an exciting development in its restructuring proposal. The company’s listed electric-vehicle arm, China Evergrande New Energy Vehicle Group (NEV), will be issuing new shares to certain subscribers to alleviate its loan burden and improve liquidity.
Under the terms of the agreement, NEV will issue a total of 5.44 billion new shares at HK$3.84 per NEV share, raising HK$20.89 billion ($2.67 billion).
The purpose of this fresh issue is to repay loans owed by NEV to China Evergrande, its founder Hui Ka Yan, and his unit Xin Xin (BVI) Ltd, among others.
Out of the total shares to be issued, approximately 4.18 billion NEV shares will be deposited into custody accounts under the mandatory exchangeable bonds into NEV shares (MEB), as well as the NEV Linked New Notes A2 and NEV Linked New Notes C2 to be issued by the company to its creditors.
The remaining 690.1 million shares will be deposited into a custody account and used as exchange property for MEB.
In a separate announcement, NEV has also agreed to issue 6.18 billion new shares to U.S.-listed NWTN for a total consideration of HK$3.89 billion, implying a subscription price of HK$0.6297 per share.
To support its business recovery, NWTN (Zhejiang) Automobile and Evergrande New Energy Vehicle (Tianjin) have signed a support deal for interest-free funding of RMB600 million. This funding will be utilized for the research and development, manufacturing, and sales services of vehicles under the group.
Upon completion, NWTN will hold approximately 27.50% stake in NEV. Assuming the completion of NEV loan conversion, China Evergrande Group’s shareholding interest in NEV will be diluted to 46.86%, and NEV will no longer be a non-wholly owned unit.
($1 = 7.8191 Hong Kong dollars)
(Reporting by Roushni Nair in Bengaluru; Editing by Shweta Agarwal)
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