Embattled property developer China Evergrande Group said on Monday its listed EV arm has agreed to issue new shares to certain subscribers to ease loan burden and improve liquidity as part of its restructuring proposal.
Under the terms, China Evergrande New Energy Vehicle Group (NEV) will issue an aggregate of 5.44 billion new shares in the unit for HK$3.84 per NEV share, pooling an amount of HK$20.89 billion ($2.67 billion).
The fresh issue is intended to pay off loans of NEV due against China Evergrande and its founder Hui Ka Yan, and his unit Xin Xin (BVI) Ltd, among others.
About 4.18 billion NEV shares to be issued to China Evergrande 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 690.1 million shares to be issued to Evergrande’s founder will be deposited into a custody account and used as exchange property for MEB.
In a separate announcement, NEV said it has 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 aid business recovery, NWTN (Zhejiang) Automobile and Evergrande New Energy Vehicle (Tianjin) signed a support deal for interest-free funding of RMB600 million.
This funding will be used for the research and development, manufacturing, and sales services of vehicles under the group.
After completion, NWTN will hold about 27.50 percent stake in NEV.
Assuming the completion of NEV loan conversion, the shareholding interest of China Evergrande Group in NEV will be diluted to 46.86 percent and NEV will cease to be a non-wholly owned unit.