Evergrande Auto Faces 1.9 Billion Yuan Subsidy Return Requirement
TapTechNews May 23rd news, Evergrande Auto released a Hong Kong Stock Exchange announcement late last night. The relevant affiliated companies of Evergrande Auto were required by the relevant local administrative departments to terminate the agreement and return about 1.9 billion yuan ($270 million) in incentive subsidies because they failed to fulfill the investment cooperation agreement as agreed.
The announcement stated that the relevant affiliated companies of Evergrande Auto recently received a letter from the relevant local administrative departments.
The relevant affiliated companies have signed a series of investment cooperation agreements with the relevant local administrative departments since April 29, 2019. Due to the group's failure to fulfill the contractual obligations as stipulated in the relevant provisions of the relevant agreements, the relevant local administrative departments, in accordance with the provisions of Chinese laws and regulations such as the Civil Code of the People's Republic of China, intend to require the relevant affiliated companies to:
Terminate the relevant agreements;
Return the various incentives and subsidies already issued, totaling about 1.9 billion yuan ($270 million), and the relevant affiliated companies also have joint and several liability.
At present, the relevant affiliated companies plan to send a letter to the relevant local administrative departments for coordination.
Evergrande Auto stated that if the requirements of the above letter are finally implemented, it will have a significant adverse impact on the financial situation and operation of the company or each relevant affiliated company.
On May 17, the share price of Evergrande Auto once rose by 70%, and then Evergrande announced the suspension of trading on the Stock Exchange. When the trading was suspended, the share price increase of Evergrande Auto reached 53.23%. Evergrande Auto's announcement this time will continue to suspend trading until further notice. (TapTechNews note: On May 17, the People's Bank of China issued three consecutive notices to adjust the down payment ratio and interest rate of personal housing loans.)
In 2023, the group's revenue of Evergrande Auto was 1.34 billion yuan, and the gross loss was 0.51 billion yuan; the total net loss was 11.995 billion yuan, a decrease of 56.64% year-on-year.
The sales of automobiles and auto parts of Evergrande Auto in 2023 increased from 60.63 million yuan as of 2022 to 146 million yuan in the reporting period; the income from property sales increased by 1.136 billion yuan.
As of December 31, 2023, the total assets of Evergrande Auto were 34.851 billion yuan; the total liabilities were 72.543 billion yuan, among which: borrowings were 26.484 billion yuan, trade and other payables were 43.012 billion yuan, and other liabilities were 30.47 billion yuan.
On April 7, Evergrande Auto announced that the 500 million US dollars strategic investment of NWTN Group was officially terminated.