Evergrande Auto announced on the evening of April 5 that the strategic investment of Newton Group has been terminated, and the company's previously proposed transaction and debt-to-equity swap terms have not made any further progress. In August 2023, Evergrande Auto announced that it had signed an agreement with Newton Group to receive the first strategic investment of US$500 million. After the subscription agreement is completed, the latter will become the largest single shareholder of Evergrande Auto. At the same time, Evergrande Auto will no longer be a non-wholly owned subsidiary of China Evergrande, and its financial performance will not be included in the performance of China Evergrande. This subscription agreement shows that Newton Group has made a strategic investment of approximately US$500 million in Evergrande Auto and provided RMB 600 million in transitional funds. At the same time, creditors such as Evergrande Group and Xu Jiayin offset Evergrande Auto's HK$20.895 billion debt owed by Evergrande Auto by subscribing to new shares of Evergrande Auto. The transaction is expected to be completed in the fourth quarter of 2023. Evergrande Auto previously stated that all funds for this strategic investment will be used in Evergrande Auto's Tianjin plant to ensure the normal production of Hengchi 5 and the mass production of Hengchi 6 and 7. At the same time, Newton Group will also help it expand overseas markets and export 30,000 to 50,000 Hengchi vehicles to the Middle East each year. Just two months later, the strategic investment, which was thought to save Evergrande Auto at the time, was suspended. It is reported that the changes were related to the negative news about Xu Jiayin, then chairman of the board of directors of China Evergrande, and the changes in Evergrande's debt restructuring. The transaction was signed with 19 prerequisites, including the effectiveness of China Evergrande's debt restructuring and the absence of major adverse events. In January this year, Evergrande Auto announced that the above-mentioned subscription and debt-to-equity swap agreements had expired on December 31, 2023, but it emphasized that all relevant parties were still negotiating on the key terms of these transactions, and Evergrande Auto would continue to update the announcement every month until the relevant resolution was determined. Now, Evergrande Auto's external support has been determined to exit, and it has entered the car manufacturing industry for 5 years, with a cumulative loss of more than 110 billion yuan. There is still no answer to how Evergrande Auto should develop thereafter. According to Evergrande's 2023 financial report, Evergrande Auto's total revenue in 2023 was 1.34 billion yuan, of which more than 90% of its revenue came from property sales, and it lost 11.995 billion yuan last year. As of the end of last year, Evergrande Auto’s total assets were 34.851 billion yuan and its total liabilities were 72.543 billion yuan, which was seriously insolvent.Since announcing its car manufacturing in 2019, Evergrande Auto has launched three models, Hengchi 5, Hengchi 6, and Hengchi 7. Hengchi 5 has been mass-produced and delivered, and the latter two are still in the development and verification stage. Since 2022, Evergrande Auto has successively exposed news such as requiring all employees to sell cars, large-scale wage arrears, and suspension of production at the Tianjin factory. Not long ago, due to funding reasons, the Tianjin factory announced a temporary suspension of production again. As of the end of last year, Evergrande Auto had accumulated losses of 110.841 billion yuan, and Hengchi Auto had delivered only 1,389 vehicles in total. Evergrande Auto stated in its financial report that its current cash flow (129 million yuan) can support no less than 12 months from December 31, 2023, and stated that it will continue to promote the research and development and production of models with the introduction of strategic investors and the availability of funds, but whether the plan can continue depends on the specific circumstances of the restructuring and financing.

$BTC $ETH